Child Life Insurance - What Makes it Different?
There are two things that make child life insurance different from regular life insurance: insurability and premiums.
Insurability
When you submit an application to insure a child, the insurance company will want to know why. Think about it. Usually a person gets life insurance to provide income to a family or business in their absence. A child normally does not contribute financially to a household. Therefore, the underwriters will wonder why a child needs insurance. They might think the child has a form of cancer that the applicant isn’t disclosing. They might wonder if the applicant is planning on arranging for the child’s death so that they can collect the death benefit. It’s a sickening thought, but it has probably happened before.
The insurance company does realize, however, that there could be certain benefits to insuring a child after the parents are insured. There exists a suggested hierarchy of insurance needs for a family. First, the primary income earner (bread winner) is usually insured first, then the spouse, children, and grandchildren. If this pattern is followed, the insurance company is more likely to approve an application for child life insurance.
Lower Premiums
The second differentiating aspect of child life insurance is the premium. Actuarial tables provide statistical information to life insurance companies, telling them the probabilities of death for various groups of people. A child obviously has a higher probability of living longer than an older person, so the risk is less and the insurance company can charge a lower premium.
Tags: Child life Insurance