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You must have noticed that almost anything is insured today. Hollywood and other celebrities have taken a fancy to insurance products. The film stars perceive their body parts as assets and if they lose them they stand to lose millions of dollars .Keith Richards the Rolling Stones guitarist has insured his hands for 1.6 Million Dollars. Mariah Carey has insured her legs for a massive 1 Billion Dollars. The singer Rod Stewart has insured his voice for 6 Million Dollars .Haven’t we all heard of the legendary British Footballer David Beckham. He had insured his feet for a cool 70 Million Dollars. Insurance agents know the marketability of their products. Even before your baby is born the insurance agent is at your doorstep marketing insurance products to expectant Moms and Dads. The biggest question on your mind is "Should I Buy That Children Insurance Policy to Insure the Life of My Baby?". I would like to remind all of you that the team of Financial Planners at Moneymindz.com are always there for you to plan your financial needs in a most effective and efficient manner. You can explore this unique Free Advisory Service just by giving a missed call on 022-6211 6588.
Let us consider the child develops a chronic health problem or is seriously injured in an accident which leaves him disabled. Then the insurability or the insurance premiums shoot up to unreasonably high levels .In some cases the child would not be able to get life insurance at all .Many parents follow the "Early Bird Gets The Best Worm Approach".
Purchasing a Children insurance policy for a young child does not require a medical test .A young child is generally considered to be healthy. A young child is less likely to have serious health problems or even if he develops serious diseases the symptoms might not be reflected at a younger age. Here the parents can avail of the early mover advantage. Requiring no medicals is a serious advantage as the premium costs are higher later on in life especially if the child develops a chronic ailment. No matter how young a child is if he has a chronic ailment the cost of the premiums for that children life insurance policy increases.
You have the Whole Life Insurance policies available for children from infancy. As long as you pay the premiums the child continues to remain insured. This guarantees the child’s future insurability especially when there is a history of medical problems, and chronic ailments run in the family. One of the biggest benefits we obtain from the Whole Life Policy is a guaranteed future insurability. You know that costs increase due to inflation as time passes. You can increase your coverage amount without having to requalify under the Whole Life Policy .Of course the premiums would increase as the coverage increases. During the introductory period the premiums tend to be less. They then increase and attain a fixed level or amount at a particular stage when the child becomes an adult. The rate would then remain constant despite future health problems or even if the individual works in a hazardous environment. The .premium remains constant even as age catches up with you.
You must have heard the saying "Little Drops Of Water Little Grains Of Sand Make The Mighty Ocean And The Pleasant Land". In a similar way our children’s corpus is built up and sizeable returns are earned by the child which helps him in his education and secures him financially.
These are slightly different from direct life insurance taken on the life of a child. You may have an existing insurance policy say a term insurance policy. You can add a rider that is mainly on the payment of a small additional premium you can insure the child you presently have and the child you might have in the future. This policy is not only obtained at affordable rates but also guarantees insurability .The term rider of this policy might expire when the child attains the age of 18 Years irrespective of the state or condition of your policy. The option then exists where you can convert the policy to a Whole Life Insurance Policy. Nobody likes to think of the possibility of losing one’s child but all emotions need to be set aside when opting for that child protection rider. When tragedy strikes it strikes suddenly and without warning. This policy provides for funeral and burial expenses in case the unthinkable happens. One would not like to have the burden of funeral costs along with the unspeakable tragedy. We have the famous quote "Fun Is Like Life Insurance, The Older We Get More Is It’s Cost".
There are certain Whole Life Policies guaranteed to be fully paid up by the age of 18 Years. You have no more premiums to pay. The policy can be surrendered for cash value. Consequently you can keep the death benefit and borrow or take a loan on the cash value. The net death benefit would be reduced by the amount borrowed or the quantum of loans taken. You can repay the loan and restore the death benefits. This is mainly for those with disposable income. Whole life insurance is a slow and steady method of building wealth. The returns are around 4-5% over a period of 20 Years. However this is still a low risk method to save and accumulate ones wealth .Sure this cannot beat the stupendous returns generated by the stock market. Yet this is a slow and steady approach to building wealth.
You know that parents do not depend on their children’s income in order to support the family. Many parents simply purchase these policies without realizing that in many cases they do not actually require such a policy. Very often parents fall for the marketing tricks of the insurance agents and buy that policy when they do not actually need it. The agents make you believe that if something were to happen to your child the least you could obtain from this policy is the cost of the casket and burial costs. Because of the sensitivity of the issue the marketing and advertisements are not very prominent .Instead the policy focuses on cost of the policy. The insurance agents stress that since the premiums are small and there are no medicals we should opt for such a policy.
We have heard the proverb "All That Glitters Is Not Gold". If a product is cheap it doesn’t necessarily make a good investment. We could invest our financial corpus in a good mutual fund. "Never Be Penny Wise Pound Foolish".
You must always consider your financial situation before opting for an insurance policy .Let us consider that you have just delivered a child. The costs associated with the child are high. You might not have the necessary funds to purchase a child rider policy or take a policy on the life of your child. You need to weigh the benefits of the policy and then decide whether you need it or not. If you purchase the policy and you are not able to afford the premiums and have to cancel the policy midway you lose precious time and financial resources.You must remember that Whole Life Policy does not build significant cash value in the initial years.
It would be wise if you could use a number of better ways to save money than taking a life insurance policy on the life of your child. College education is very important. Always save or set up a corpus for college education. The worst possible loss of income is the financial losses suffered due to the death of the parents. Always make sure that sufficient life cover is taken on the life of the parent. We would not want a situation where the parent dies and the child is insured which leads to financial loss.
I would like to end this article with the famous quote "Children Are The World’s Most Valuable Resource And It’s Best Hope For The Future". You need to make the right decision with respect to taking that life insurance policy on the life of your child. All decisions we make whether good or bad are reflected, or its results are shown a few years later. So make those decisions pertaining to life insurance wisely.