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A Gift Oft Forgot

December 7, 2009

Bibs. Cribs. Teddy bears and knitted blankets. The gifts pile up when you welcome a little one in to the world. But, one very important gift is often forgotten: life insurance.

A little known fact is that life insurance is just as important for children as it is for adults, but for different reasons. For instance, with an infant you don’t need insurance to cover loss of income they earn. But, purchasing life insurance for a child can help guarantee financial security for them and their future family. Here’s how:

It will guarantee insurability
You never know what tomorrow will bring. In the unfortunate event that your child develops an illness or medical condition, they may become ineligible to purchase life insurance at a reasonable rate. Purchasing life insurance for your child when they are young guarantees the insurability of the individual for life. If your son or daughter does become uninsurable, they will already have and be able to keep the coverage from the policy you purchased.

It can help financially protect your family
We hate to think about losing a child. But the reality is, sometimes it happens. While losing a child doesn’t result in the loss of income, it can cause a financial strain. Funeral, burial and related expenses can run thousands of dollars (during a very emotional time). Purchasing a life insurance policy will help to ease the financial hardship.  

It’s the easiest time to do it
The easiest time to buy a life insurance policy is when the child is first born. Unless your son or daughter is born with a medical condition or there are complications at birth, the process of obtaining a life insurance policy is quick and simple for a child.

Also, premiums are at their lowest. Compared to an adult policy, a whole life or universal life insurance policy for a child is an affordable way to provide the same lifetime coverage. Purchasing a whole life or universal life policy while your child is young ensures a more financially secure future.

You have options to choose from
You can purchase a life insurance policy when your child is 15 days or older. And, you can choose the product that’s right for your family:

  • Whole life insurance: Purchasing a whole life insurance policy, such as ERIE’s 20-pay policy, allows you, or a grandparent, to pay the insurance premium for 20 years and then turn over the benefits to your child (with no additional payments). 
  • Universal life insurance: Similar to whole life insurance, a universal life insurance policy accumulates value over the life of the policy. These policies can also be used to accumulate funds for college or long term savings. Funds from a universal life policy are currently not required to be reported on a FAFSA form as an asset, which can be an advantage when applying for student loans or financial aid for college.
  • Guaranteed Insurability Option Rider (GIO). The GIO rider is available when you purchase whole life or universal life insurance. The GIO Rider is available in amounts from $5,000 up to the face amount of the base policy, with a maximum amount of $50,000. This option allows the individual to increase coverage six times on the option dates without additional underwriting. For example, an individual with a $50,000 universal life policy could increase coverage during the life of the policy to $350,000, without additional medical tests.

Talk to your ERIE Agent about what options are best for your young ones.