The ‘secret’ insurance policy parents need to know about
Written by Joseph Regan on March 27, 2016.
What would you say if I told you about a product that financially protects your child if he or she become critically ill, gives them life insurance for life, and also returns money to you in the future to finance their important life events?
Sign me up!
It sounds too good to be true, but it actually exists in the form of child whole-of-life insurance policy. It’s surprising that these policies are so little-known given they offer such great benefits to parents and their children alike.
If you are a parent or grandparent, you can take out a policy on your child or grandchild from when they are just days old up to the age of 18. If your child is diagnosed with a critical illness, the policy pays a lump sum to pay for the medical care and any other costs associated with the illness – advantageous if a parent has to give up work to become a carer.
The monthly premiums are very affordable (only about 200 USD per month) for a given term, but when the child comes of age (the parent is the owner of the policy and decides when the child can take over the policy), there are two options:
The first is to cash in the accumulated cash value of the plan. During the course of term, your monthly premiums are invested, and you will yield much higher returns than what you would at a bank. We all know that starting out as an adult can be tough financially, so you could use the compounded growth towards a college education, a down payment on a house, finance a wedding, or help start a business for your child.
The second option is to pass the policy over to your child – giving them life insurance and critical illness cover for life. This is astonishing! Your kids will potentially never have to pay for life insurance and critical illness cover again, and will still have the money saved in an investment vehicle that’s compounding in growth. The plan could potentially be worth millions if you let it sit for decades.
Furthermore, if your child or is unfortunate enough to be hit by illnesses such as cancer or diabetes (red flags when it comes to life insurance), it won’t matter because they will have already obtained insurance beforehand.
This kind of policy is amazing in many ways: it protects your child from critical illness, gives you peace of mind, can provide life insurance for their entire life, and can finance their future. For many responsible parents, it’s a no brainer.