Whole Life Insurance Plan for Kids: Secure Their Future from Day One

Whole life insurance is a kind of Life Insurance that covers the entire life of the policyholder, i.e. about 99 to 100 years of age, guaranteeing the death benefits to beneficiaries upon their sudden demise. The partial premium paid by the policyholder is allocated towards the sum assured, & the remaining portion is invested. The amount of profit is paid to the policyholder if either they survive till the completion of the maturity period or they decide to withdraw the funds, depending on the fund’s performance. Additionally, some of the policies pay dividends to the policyholder, helping them achieve their financial obligations post-retirement.

A whole life insurance plan for children is a type of life insurance plan that is well-designed for children between the ages of 14 days & 17 years old. As a Child Saving Plan, it helps parents with financial security & lifetime coverage at a low premium cost. It includes long-term commitments of making premium payments, with low return rates, sometimes in comparison to other plans. In any unfortunate event of a child’s death, this plan includes receipt of death benefits by the parents to meet the unexpected expenses without any added stress.

Does This Policy Suit You?

A Whole Life insurance plan best suits you if:

• You have a family history of medical conditions:

In case of any family history of medical conditions, buying an insurance plan for a child at an early age will offer coverage before these pre-existing diseases develop. It offers you financial protection in case of a child’s demise, allowing you to manage expenses without any added stress.

• You want to give your child a financial head start:

The cash value component embedded in the plan serves as a safety net, providing a cash value when the policy is transferred to them at the age of 18-25 years. This cash value can act as an emergency fund to meet their college expenses.

• You want to give your child affordable coverage: 

As we know, the earlier the better, which means the earlier you save, the more cost-effective the rates can be attained. Hence, this plan can easily fit into your child’s budget whenever they get the policy transferred.

How to Get a Child’s Whole Life Insurance Plan?

Provided are the steps to get a child’s whole life insurance plan:

Step 1: Evaluate their coverage needs

Evaluate the requirements of the plan for your child to assess the amount of coverage that will fulfil your child’s financial requirements.

Step 2: Consider their future financial situation

If you want a substantial cash value in future, invest a large amount in the plan to accelerate the growth.

Step 3: Shop for multiple quotes

Review quotations from multiple insurance companies to get the desired coverage.

Step 4: Apply for a policy

Choose the Best Child Insurance Plan from the plans reviewed in the previous step. Input the details of the child, which include their name, date of birth, some personal details, etc. There is no such requirement for a child to get medical examinations done, but it may include some health-related questions, where you can disclose health conditions, if any. 

Step 5: Await approval

The waiting period is not too long under this plan, as there are no medical check-ups done. This means once the insurance company reviews the application, the coverage gets started, making the process faster & convenient for parents.

Step 6: Review terms

Once the application is approved, the insurance company will provide you with the policy documents containing its terms & conditions. Review the documents for any further clarifications & understanding, if needed.

Step 7: Sign the documents & pay premiums

Once the policy has been reviewed for its understanding & correctness, you may sign the same & proceed to make payment towards the premium amount to get the policy started.

Benefits of a Whole Life Insurance Plan for Children

Provided are the benefits of a whole life insurance plan for a child:

• Guaranteed insurability

This plan can be sustained for the child’s lifetime, irrespective of their lifestyle or health. This plan will be useful if they develop a medical issue, pursue any risky career, or engage in any dangerous hobbies etc. Where buying a new insurance plan would be quite a costly affair, but with this feature of guaranteed insurability, the coverage would remain active without incurring any additional costs or getting medical check-ups done.

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• Low premiums locked in.

Though under a traditional life insurance plan, the premium cost keeps increasing with an increase in age, but under this plan, the premium cost remains the same until the policy is held. This means that when a whole life insurance plan is bought when the child is young, it helps secure a lower rate that gets locked, helping you make bigger savings.

• Guaranteed cash value growth

This plan offers a guaranteed cash value factor, which means a part of the premium can be invested for the purpose of tax-deferred growth. In future, your child has a choice to withdraw those funds, avail it as a loan, continue paying premiums or cash it out.

• Potential dividend payments

Some of the plans may include payment of dividends, which can be saved, spent, invested, or used to make premium payments by your child.

• Flexible future financial resource

Once this plan gets transferred to the child upon attaining majority, they themselves can build their financial future. This includes either remaining invested, converting the plan to an annuity plan, or using the cash value component to meet expenditures, such as tuition fees for college, making down payments, etc.

Conclusion

In a nutshell, a whole-life plan offers whole-life coverage & wealth creation to achieve financial objectives. It helps protect your family members & helps you plan for long-term savings. It is considered to be a comprehensive plan, which allows you to plan your family’s financial future, make a tax-effective investment, or look for long-term investment plans. Hence, planning a whole life plan for your child provides them with life coverage & wealth creation, ensuring financial security, mental peace & disciplined savings for the parents.