Life Insurance for Children in Canada

Being a new family or expecting parents means that you must plan ahead for you and your family, and one of the best financial planning tools is life insurance. Purchasing insurance that covers your child in addition to you and your spouse is a popular strategy to safeguard your family. It’s important that you truly understand your options when it comes to life insurance for your children, even though you may have seen or been introduced to some of them.

What Is Child Life Insurance?

“Children’s life insurance” is a broad word used to represent life insurance policies where the insured is a youngster. Children’s life insurance is a type of policy or rider that a minor’s parent or grandparent (who will serve as the policyholder) purchases for them.

As long as the policyholder continues to pay premiums, the insurance will continue to pay out dividends for the entirety of the covered child’s life, even into maturity. In addition to providing lifetime insurance protection, this gives the covered youngster a head start on their savings and financial goals, should they decide to access the cash value.

You can provide your child with more options and assist them in covering the cost of their first car, house, or college by getting permanent life insurance.

If you are a parent or grandparent, you can provide your grandchildren with permanent financial stability by getting life insurance for them. Parents usually do not get insurance for their children primarily to provide more financial support in the unlikely event that their children pass away before them.

How Does Life Insurance Work for a Child?

You can either acquire your child their own policy or add them as a rider on your own if you wish to purchase life insurance for them. While the benefits and coverage levels of each will vary, they both serve the same purpose of safeguarding your child by disbursing funds to the designated beneficiary in the unlikely case of an unanticipated circumstance.

You can use children’s life insurance as a helpful financial tool to save for college expenses, guarantee your child’s insurability, lock in inexpensive rates, and/or cover funeral expenses if your child passes away.

What Is the Purpose of Life Insurance for Kids?

Despite the widespread belief that life insurance is only necessary for adults, parents should get it for their kids for a variety of reasons.

Purchasing life insurance for your child is akin to creating a safety net for finances. In the terrible event that something occurred to your child, the life insurance policy would pay out to your specified beneficiary. The receiver can use this amount to pay for living expenses or settle any debts your child may have, including burial charges. You can save cash value in a permanent life insurance policy for your child, which they can withdraw to cover future expenses, should they decide to get one.

Why Child Life Insurance?

Insurance may assist children in being safe and comfortable with their health and finances throughout their long lives, in addition to helping them prepare financially for an unexpected death.

If you lock them into an insurance policy now, they might be able to convert it into an adult coverage without going through a medical examination. Their premiums will likely be less than if they had applied independently because of this feature because the rates will probably be based on their younger, healthier selves. If you’re unsure, it’s better to speak with an insurance advisor. This can vary depending on the insurance company.

What Are the Advantages and Disadvantages of Children’s Life Insurance?

They will each have advantages and disadvantages, just like any other kind of insurance.

The primary advantage of obtaining insurance for a child is that the death benefit can help with any expenses related to the unlucky incident. This can entail paying for the burial, giving yourself space to mourn, or getting individual counselling.

The following are additional benefits of children’s life insurance that the insured child can offer:

Coverage for the insured child for life. If a child is diagnosed with a serious illness or health condition that could affect their ability to get insurance in the future, this can be very beneficial.
Because of the insured child’s early age and generally good health, children’s life insurance policies typically have reduced premiums.
As previously indicated, children’s life insurance can be utilized as a savings vehicle or as a more adaptable substitute for a Registered Education Savings Plan (RESP).

Children’s life insurance has some disadvantages as well, although not all situations will result in them.

Disadvantages of Children’s Life Insurance?

Among the typical drawbacks would be:

Compared to other investment options, the rate of return on children’s life insurance contracts is lower. Children’s life insurance’s cash value component isn’t going to outperform a specific investment instrument.
It’s an extended commitment. The policyholder must continuously pay the policy premiums for the stipulated payment period in order for children’s insurance to make sense as an investment and a form of protection. Many of the benefits (such as certain future insurability) will be at risk if one misses payments.

Should you decide to apply for a policy, children’s life insurance might make a wonderful present for your child or grandchildren. Giving children a financial asset and future insurance coverage can help them get a jump start on adulthood. Being aware of the policy’s benefits and restrictions can make selecting the appropriate coverage for your loved ones easier.

How Do I Buy Life Insurance for My Child?

You can either buy your kids their own policy or add a term rider to your own to provide them with life insurance. Permanent life insurance gives children more alternatives for coverage and future eligibility for policy, whereas term riders are typically less expensive but offer far less coverage.

1. Child Term Riders (CTR)

A CTR is one of the least expensive methods to obtain insurance for your kids if you already have life insurance. These riders normally provide assured insurability up to a specific age, commonly between 21 and 25 years old, at which point your newly independent child can get their own life insurance policy without having to undergo a medical examination.

2. Stand Alone Term Renewable Coverage

This is a child’s personal term life insurance policy, which can be renewed on a set schedule without further medical documentation. You can convert these policies to permanent life policies before they expire.

3. Permanent Insurance (Whole Life or Universal Life)

With the most extensive coverage, this is the priciest option. The payout is contingent upon the insured’s passing date; nevertheless, the premiums are significantly greater. There may occasionally be an investment choice available, but you should never choose it over an RRSP or TFSA. Whole or universal life insurance is the best insurance policy for your children.

How Much Life Insurance Can a Child Get?

A child’s eligibility for life insurance varies depending on the kind of coverage you select. Generally speaking, coverage for a child under a term rider is available in $5,000 increments up to $25,000 or $30,000.

What Is the Best Children’s Life Insurance Policy?

Many of Canada’s largest insurers, including Beneva Life Insurance, Equitable Life of Canada, Empire Life of Canada, Assumption Life, and Industrial Alliance, offer whole life insurance for children. The majority of the finest insurance firms in the country also offer alternatives for child term riders. Check in with the Sure insurance the find out the policy you qualify for.

The ideal children’s life insurance policy for your family may depend on a number of factors, including personal preferences, unique needs (such as riders and alternatives), and more. It may be a permanent policy or a term rider.

FAQs

How soon should I buy a policy for a child?

Certain insurance providers provide plans that go into force as soon as the child turns 15 days old. One advantage of beginning this early is that you will have more years to receive dividend payments on a participating permanent policy. Keep in mind that rates and premiums typically increase with age.

How much does life insurance for children cost?

The cost of a kid’s $50,000 stand-alone permanent policy is usually $50 per month; in contrast, a child rider for term life insurance may only cost $5 per month for the same amount of coverage. Premiums rise in tandem with age and coverage quantities.

Finding the Protection You Need for You and Your

Get in contact with Sure Insurance Team right now if you still have concerns regarding your possibilities for life insurance for you and your kids!. You can determine your current coverage and protection or create the ideal life insurance plan and package for your needs by working with a life insurance advisor.

At Sure insurance we compare rates and plans from the top life insurance providers in Canada. To create the ideal package and provide you with the protection you require, we offer knowledgeable life insurance solutions, including term life insurance, permanent life insurance, critical illness insurance, and no medical life insurance.