Parents’ main priority has always been ensuring the safety and well-being of their children. Especially in today’s uncertain times, living amid the Covid-19 pandemic and escalating global conflicts, many parents ask how they could best protect their children with insurance. Before turning to an insurance agent, it can be smart to gather as much information as you can on the different packages available.
Keep in mind that even though there are many amazing professionals in the industry with high integrity, many will try to convince you to pick unnecessary coverages just to boost their commission. When it comes to insurance benefitting your children, 3 different ones come to mind: life insurance for parents, medical insurance for the children, and the much-debated life insurance policy for the kids themselves. In this article, we’ll mainly focus on medical insurance and children’s life insurance, as we have already written detailed articles on the benefits of having life insurance for adults. In short, it is highly beneficial to have in case you have children and it is outright irresponsible not to have some kind of life insurance policy if you are a single parent.
Medical insurance for children
Ensuring that your child receives the best possible care is essential for every single parent. Medical costs related to having children are through the roof nowadays and not having insurance coverage for children can bankrupt a family at any moment and can result in your child not receiving the care he or she desperately needs. Fortunately, if the mother has medical insurance, her baby is automatically covered for 30 days from birth, as the newborn is considered to be an “extension to the mother”. After this period ends, the mom’s policy might still cover some essential services, but it is far from a full-scale insurance for the baby. In order to receive that, you must enroll in or change your already existing plan. Normally you would have to wait for the enrollment period to open, but since the birth of the baby qualifies as a ‘life event’ that enables a special enrollment period. During the special enrollment period, you’ll have 60 days to apply for a plan and it is guaranteed that your application won’t be rejected. Missing this deadline can be costly so keep it in mind.
Can’t afford medical coverage for children? There is a solution! Applying for Medicaid could be a solution to your problems. Whether you are eligible or not will depend on your level of income. There could be situations when your income is too high to qualify but still too low to be able to afford health insurance for your children. If you are pregnant or have small children, applying could still result in success, even if your income is a bit higher than the set level.
Another solution could be the Children’s Health Insurance Program, commonly referred to as CHIP. It is an insurance program that offers low-cost coverage for children. It was specifically designed for people who earn too much to qualify for Medicare but struggle to pay for private insurance services. The qualification criteria vary state by state, but if you are not much over the Medicare income limit, you’ll likely to receive the help you need. With CHIP you can expect coverage for at least check-ups, immunizations, emergency services, and doctor visits, but what it covered exactly varies by state just like the qualification criteria.
Life Insurance for Children
Life insurance is traditionally used as a safety net for people who are financially dependent on the insured person. Using this logic, since your children are not generating income, it seems illogical the have a life insurance policy for our children. This is also how our team of professionals feel about this type of coverage. We believe that opening a savings account for the children is a much more logical step to ensure we are prepared for whatever the future brings.
Pros and Cons of Life Insurance for Children
Pros:
- It can provide financial aid in case the child dies. It can not only cover funeral expenses, but also provide a financial buffer in case grieving parents wish to take some time off work to mourn the loss experienced.
- It can guarantee insurability and lock in lower rates for the future. People with certain health conditions or doing certain activities considered dangerous by the insurance companies (like taking up rock climbing or parachuting) can result in not being able to get life insurance. Having the insurance early in life guarantees insurability no matter what the future holds. The starting payments are also the lowest for young children and although rates increase over time, they’ll still likely be lower in the end, than if you had started the coverage as an adult.
- The cash value part of the coverage can be considered an investment/savings account, with some parts of the premium paid contributing to an ever-increasing amount that can be used by the child if he or she wishes to do so.
Cons:
- It often provides low coverage. Many times, children’s life insurance coverage limit is well below $100,000, which will likely be way too low when the child turn into an adult.
- It provides a low rate of return. While most insurance agents will try to sell you the policy as if it was a savings account for the child due to the cash value component, its rate of return is far lower than any other savings/investment alternatives.
Conclusion
All in all, we believe making sure that parents are covered by life insurance and that the child has medical coverage is a must for any responsible parents nowadays. When it comes to having life insurance for the kids, like most experts, we would advise against it and instead would dedicate some of the available disposable income in a savings account.