You hold your sleeping baby in the delivery room, you marvel at their newfound life, and think about the world that awaits them. It’s a precious moment, one you’ve spent months preparing. An entire life is now dependent on you, one who will be affected by your every decision.
You never want to imagine anything happening to your child, but what if the baby gets sick? What if the unimaginable happens? It’s hard to think about getting insurance for children. A child’s insurability (i.e. their health) can change quickly and unexpectedly and having life insurance for your child can guarantee a lifetime of worry-free coverage. Having a new baby adds new expenses, but life insurance doesn’t need to be costly. There are options to suit every need and budget.
Life insurance coverage options for children
- Child Term Riders (CTR) – If you already have life insurance in place, one of the least expensive ways to get insurance for your baby is with a CTR. These riders typically offer guaranteed insurability up to a certain age, usually 21-25. This is the age at which your baby-turned-college-grad can purchase their own policy without the need to supply any future medical evidence.
- Stand Alone Term Renewable Coverage – This is a child’s own insurance policy, and can be renewed at predetermined intervals without supplying any future medical evidence. Before these policies expire, you can convert them to permanent or whole life policies.
- Insurance for life (Whole life or Universal life) – This is the most expensive solution with the most comprehensive coverage. It pays out regardless of when the insured passes away, but the premiums are much higher. There is an investment option available sometimes, but don’t consider it over a TFSA or RRSP for investing, it’s not worth it.
The price of any policy depends more on the type of coverage and less on the insurance company used. However, you should look closely at your life insurance quotes to see what different insurance providers cover under their policies. Actual coverage can vary significantly from one provider to another for plans that appear to have a similar price.
Life insurance rates for children
Manulife offers a CTR for $2.50 per month for $10,000 of coverage. At age 25, this $10,000 coverage can be exchanged for $250,000 (or twenty-five times the value of initial coverage) of standalone insurance. The child must be assessed insurable when being added to the rider. However, If the child has any health concerns when they apply, they can be denied the rider.
Canada LIfe offers a CTR for $4.50 per month and can also be exchanged for $250,000 of standalone insurance later in life. To qualify, the first baby has to have been born and the child is deemed healthy, and therefore, insurable. Any child born after the CTR is in place can be added 15 days from their birth with no evidence of insurability required and no change to the $4.50 per month, regardless of the number of children eventually insured.
Foresters offer the ability to add a CTR at no additional cost to your own insurance. The child can be added 15 days after their birth and following a health assessment. The rider is $10,000 of face value and can be converted to five times that value ($50,000) when moving to a standalone insurance policy when the child reaches the age of 16.
It is always best to get all the details and compare the pricing, plans, and available options.
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When can you get life insurance for children?
Based on a healthy birth, you can acquire life insurance immediately with a number of insurers. Some insurers have a restriction that the newborn must be 15 days old before they will insure the child, while other providers require the child to be even older.
The wait time to enactment depends both on the insurer and the children’s life insurance product the parent has selected. The parent will have to truthfully answer questions about the child’s medical history which may include family members’ histories.
Know that insurers can not ask if you have previously undergone genetic testing for your child. Despite this, if in your family history, a family member has an inheritable condition, the insurer can deny coverage for the child.
Does a child need life insurance?
Life insurance for kids can be a sensitive issue. Parents are busy enough trying to get their child to sleep, eat, or to stop crying, they may not even be aware it exists. Life is unpredictable. An insurance policy for your new baby may be a great help should the unthinkable occur. Many families take time off work caring for their sick children. They incur major financial losses with no relief in sight. Insurance does not replace loved ones, it is there for the survivors to carry on. It is there so that you too can one day confidently embrace your grandchild.