Daily Dupaco

Tuesday, May 08, 2012

Life insurance for children

It's every parent's worst nightmare - burying a child.

But it happens, and it's important to be prepared for the "what-ifs" of life.

Dave Keil, an insurance agent at Dupaco Community Credit Union's Dyersville branch, recommends that all parents purchase life insurance for their children.

"If there's ever a situation where a child does pass away, there are quite a few people living paycheck to paycheck, and they don't have $10,000 to cover the costs of a funeral," Keil says.

The sooner parents can tackle the task, the better.

"I know some people from a big family, and out of 12 children, four had type 1 diabetes," Keil says. "After you go to the doctor and you find out your child has this, it's not that you can't get life insurance, but the premium changes drastically."

If you haven't purchased policies for your children, start with the insurance agent who handles your auto and home policies. If the agent doesn't write life insurance policies, he or she can suggest a trustworthy agent who does.

There are two basic ways to handle life insurance for children:

  • Option 1: If parents already have a life insurance policy, they can add a children's rider - for say $10,000 for each child - to the existing policy. A children's rider, the least expensive option, typically costs about $60 to $70 per year, and it covers all of the children in the family. When the children reach adult age, they can convert it to a whole life policy, guaranteed for the rest of their life, and even take out additional amounts. "And if the parents have another child, they don't have to call the insurance agent," Keil says. "That child is automatically added and insured."
  • Option 2: Parents can purchase a life insurance policy on their child. If purchased while the child is young and healthy, the policy is relatively inexpensive and varies minimally from one company to the next. A $50,000 policy, for instance, typically costs about $100 annually. "If that policy is purchased prior to a child getting a disease of whatever type, the policy is still in force as long as the premiums are paid," Keil says. "It's just kind of a guarantee against the future."

By Emily Kittle

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