Kids Policies

Why do you need them and what are your options

When my husband Mike was in college, we learned that his parents had a whole life policy on him. With our kids now fully grown, it is incredible that his parents had the foresight to put a policy in place. Did we use it? I will get to that in a bit.

What is a kid’s policy?

Simply put, Kid’s policies are life insurance policies to provide a death benefit in case of death. This is where people who don’t believe in them stop. We should not be thinking about a child’s death, right?

According to the CDC, there are over nine thousand deaths a year for children under fourteen. The number 1 cause of death is an accident. If you think about it, I am sure you can think of at least one child you know that passed away too early. It is unexpected and that is the biggest reason to have insurance in place.

Leave death behind for a moment

There are other reasons that kid’s policies make sense. In my husband’s case, that policy was not used for death but was used for its cash accumulation. That money helped us to make a down payment on our first home. His parents understood what this economy is showing us repeatedly. Tough times tend to come at the wrong times.

Using a small policy that can do more than just be there in death but can also be there to help with life is one of the Pay it Forward benefits.

The right policy for the right goal

We need money for things in life. Be it to cover death, a down payment, a college fund, or a jump start on retirement.

Death benefit - There are several plans that are designed specifically for the death of a child. These are super low costs plans that give you peace of mind in knowing funeral costs will be covered.

College Planning - Let’s face it. College is super expensive these days and will continue to cost more in the future. Using a cash accumulation strategy in a policy for a child can defray that cost. Like all money strategies, these take time to grow so the earlier you start the better.

Retirement Planning - Have you seen the stock market lately? The market by design has risks. Any financial plan should include “safe” vehicles. A parent or grandparent can fund a policy in such a way that when the child is ready to retire, there will be a nest egg waiting for them. It grows within the policy and can be taken out tax free in the future. A legacy gift.

Protected Insurability - A child may be healthy and have no issues and then suddenly, they have an illness or a disability that would prevent them from being insured in the future. Yes, even adults face this one. Insurance companies manage risks and there are some situations that present a person as “uninsurable”. You can get a policy as soon as fourteen days after being born.

Now is the time

If you have not considered a policy for your child or grandchild, Now is the time. Protect the most precious things in the world to you. You can do it for only one of the reasons above or all of them. Don’t wait until it is too late.