The pandemic was a good reminder to us parents and guardians that you might not be forever around to look after your little ones. And even if you do, you would undoubtedly need the financial capacity to handle any unforeseen crisis. This might have gotten you to think if you should get a whole life insurance plan for your kids to secure their future.
But is a life insurance plan for children worth the investment, or should you go for other options like a Child Plan that focuses on children and their needs?
Today, we will discuss how adequate life insurance can secure your kid’s life compared to other options. Meanwhile, you can also look into the benefits of the Child Plan offered by Insurance for Children for your little ones.
What are whole life insurance plans for kids?
A life insurance plan for kids works the same way as the two for adults. As long as the premiums are paid on time, the beneficiary will receive a death benefit if your child passes away.
The only difference here is while you can choose any kid to be one of the insured children, the policyholder will always be an adult. Also, you cannot buy term life insurance for children. So anytime you want to buy life insurance for your little ones, it always has to be whole life insurance.
The benefit of having whole life insurance is that it continues to cover your child as long as they are alive. This means the policy cannot be cancelled due to health complications or illness, won’t expire after a certain number of years, and the premiums will increase.
Should you buy whole life insurance for your child?
If whole life insurance for your children is a worthy plan, the real question is. Although it is a very individual choice, we have identified certain loopholes with this arrangement.
First of all, the plan directly does not benefit your child or protect them. The benefits are only paid out in case your child dies. This means the only ones who would be receiving the actual benefits are the family members who survive them.
Also, most families will not be dependent on their children for a regular household income. This means that although the death of a child will be heartbreaking for any parent, it will not cause any financial strain. So unless you have a unique situation that might require you to seek financial assistance after your child’s death, whole life insurance is not required.
The biggest problem with this plan is that it does not protect your child’s future. As adults, we can always care for ourselves financially and see that our needs are met, but children do not have that privilege. So in case something goes wrong in the future and you are not there to support your child anymore, whole life insurance will be of no use to them. They will neither be able to pay the premium nor get any cash benefit to finance their life.
What should you do instead?
Instead of buying whole life insurance for your children, we recommend trying a Child Plan if you really want to secure their future. The Child Plan is a future-proof savings opportunity for parents and guardians that offers financial stability to your children even if you are not around.
Here are a few things that make the Child Plan a much better investment for your child’s future:
Works for children of any age
The best part about the Child Plan is that it works for children of any age, as young as 14 days old. After all, you can never be overcautious when it comes to your little ones. Also, unlike most other plans for your children that expire after they turn 18, the Child Plan can be initiated even for your kids over 18.
No cap or threshold
Every parent should be able to invest and save as per their financial capacity, and only the child’s plan can guarantee this level of flexibility. With the Child Plan, you have no minimum threshold or maximum cap to restrict your investment. So while, on average, families contribute about $225 a month to this plan, you are free to invest more or less than this.
Participating in whole life insurance
The Child Plan follows a participating whole life insurance model. You get the benefits of whole life insurance and additional benefits like guaranteed cash value, tax-free annual dividend, and an ever-growing tax-free whole life insurance plan that continues to grow throughout your child’s life.
No limitation on fund usage
The Child Plan is designed to secure your children’s future and dreams. Once you transfer the plan to your children, they can use the cash value for other financial needs. Whether investing in higher education or paying off the down payment on their first house, the Child Plan supports every major event of your child’s life with seamless cash value and withdrawal benefits.
Available outside Ontario
Do not let Ontario restrict all the significant financial investments you want to make for your child. The Child Plan is now available even outside Ontario in Alberta and British Columbia provinces, along with a few upcoming provinces that are soon to be added to the list.
The Child Plan is not the same as RESP (Registered Education Savings Plan). However, it is a much better option.
RESP (Registered Education Savings Plan) only grants you access to the funds if your child goes for post-secondary higher education. On the other hand, the Child Plan is a private and faster-growing plan where the cash value can be used for your child’s financial needs.
You never know what the future holds for you, so why not secure your child’s future while you are still around. While the benefits of a whole life insurance plan will only take in the event of the child’s demise, it is your responsibility to secure their future dreams and aspirations throughout their life as a parent. And the only plan that guarantees these tax benefits and seamless investment options is the Child Plan.