Shopping for life insurance can be a somber event, especially if you're purchasing insurance for your kids. While no one wants to think about the death of a child, it's best to be prepared with a policy that will make sure final expenses are covered if something tragic happens. Life insurance policies on children are typically inexpensive and can often be purchased as an addition to an existing policy you have on yourself or your spouse.
There are two basic types of life insurance policies for children: riders attached to term policies on adults and whole life. Term life insurance policies last for a specified period of time, usually 10, 20, or 30 years, and only pay out if the insured person dies during that term. While you can't buy separate term life insurance policies on children, some term policies allow you to add your children to your policy in the form of a rider. Riders that cover other family members don't usually cost very much, but they don't provide very much coverage either, generally around $20,000.
Whole life policies are more expensive than riders on term life insurance, but they stay in effect for the rest of your child's life as long as the premiums are paid. You can often purchase whole life policies for children that have a bigger benefit amount than a rider on a parent's term life policy would entitle you to. Many whole life policies also build tax-deferred cash value, allowing your child to borrow against the policy if he or she needs access to a loan for college or a large purchase, such as a down payment on a home. Some whole life insurance policies even allow you to borrow up to the amount you've paid in in premiums without paying taxes on the amount.
One thing to consider when deciding whether to purchase a life insurance policy on your child is ensuring his or her future ability to maintain life insurance at an affordable rate. Children diagnosed with serious chronic illnesses at a young age often don't qualify to purchase many life insurance policies when they become adults. Policies that they do qualify for are often very expensive or don't provide as big of a benefit as they might like to have.
If you're not sure what policy is best for you, consult with an insurance agent who sells life insurance policies. An experienced agent can help you compare policies from different companies and help you purchase something that fits your needs and budget. You can start by checking sites like http://www.dainsurance.com.