When I first bring up the idea of whole life insurance for
children, many mothers get upset. No parent wants to imagine
outliving their child and it may seem like just another burden on
the family budget for something that's very unlikely to happen.
But when I show them the benefits of locking into a low monthly
premium now and what that will mean many years into their child's
future, most parents are very interested. I first got
interested in these types of policies when an elderly woman came
into my training office some years ago to pay a premium of about
$8. What could cost just $8, I wondered. When I pulled
up her account, I saw that her parents had purchased a small whole
life policy for her many years before. How thankful she was
for this gift from her loving mom and dad!
What are the advantages of whole life insurance for a child?
- It locks in a low premium for life. Typically, a whole
life policy costs between $15 and $22 per month - a rate that will
not increase, ever.
- The policy has cash value which can be borrowed against with a
low interest rate. Many adults carry whole life policies that
have far greater cash value than the sum of the premiums.
- There is no medical exam required. Most policies issue
quickly and with very little underwriting. If you child
develops a serious condition or illness after you have purchased
the policy for them, the premium is locked in and cannot
- By selecting the "paid up addition" option, the dividends from
this policy will buy more life insurance in the future. For
example, my 17 year old son's policy could pay out as much as
$85,000 upon death later in life, although I'm only paying for
$25,000 in coverage.
- It is a policy they can keep for their entire life - through
job changes, self-employment, periods of unemployment - whatever
comes their way, they will always have this policy in force.
There are also options that allow the parent to pay off the
entire policy in 10, 15, or 20 years or even in one single
payment. I should also mention that State Farm's financial
strength is an important reason to consider our company.
We've been around for 90 years and that's important when
considering a policy for someone that may not be used until the
At a minimum, a review of your policy and your needs annually is
a good idea. It's surprising to many how much life has
changed each year. It's one of the pieces of the job that I
most enjoy - meeting your family and learning about your