Looking for life insurance on a 2 year old?
Then this is the article for you.
You’ll see what life insurance costs for a child, the best companies for babies, how you can apply in minutes and much more.
What’s Covered In This Article
Baby life insurance for a two-year-old usually costs $4.00-$16.00 monthly for a policy that covers the child between $10,000-$50,000.
Your exact cost will vary based on the insurance company that issues the policy, precise age of the infant, gender, coverage purchased and underwriting restrictions.
Gender $10,000 $20,000 $30,000 $50,000
Female $4.00 $7.00 $10.00 $16.00
Male $4.00 $7.00 $10.00 $16.00
Baby life insurance plans are almost always a small whole life insurance policy. Whole life coverage is a basic type of permanent life insurance that will never change or expire.
Here is what you need to know.
- Locked in prices for life
- Coverage is guaranteed to last forever
- Insurance coverage will not decrease
- Builds cash value that you can borrow from
Since you are the one buying the life insurance policy for kids, you will be the beneficiary (unless you name someone else).
If the child were to die, the insurance company would pay you a lump sum equal to whatever amount of coverage you purchased.
As is the case with all life insurance, the proceeds are tax free and there are no restrictions how the money is spent. Put plainly, the money is yours to use as you wish.
Whole life insurance features a savings component called “cash value”. A small portion of each payment you make goes into this account. It also earns interest.
The funds that build up in this account up over time can be accessed for college or any other expense you want.
There is no consensus regarding if someone should insure a child with life insurance. If you research this topic online, you will see many financial advisors say that you shouldn’t since children don’t earn income.
At the same time, you will also see many financial professionals who say it is a good idea.
Truthfully, life insurance on a juvenile has its pros and cons. You will have to decide for yourself if you see value in children’s coverage.
Here are the four main reasons to consider life insurance on a grandchild or a child of your own.
Cost of a funeral
First, there is no question that it is incredibly unlikely that a child of any age will pass away. From a statistical perspective, it almost never happens.
Having said that, this tragic life event does happen (about 12,000 per year in the USA). When it does occur, funeral bills can be a huge issue for many American families.
According to the National Association of Funeral Directors, a traditional burial service can cost nearly $10,000.
If a bill this large would constitute a hefty financial burden for your family, then a child life insurance policy is probably worth the pennies per day it costs.
Time to grieve
Losing a child is frequently referred to as the worst pain imaginable.
A life altering event of this magnitude will likely make it difficult to carry on normal life for an unknown period of time.
A life insurance policy on your baby can provide a financial cushion that allows you to take time off work to heal.
Help with college expenses
Life insurance for kids builds cash value. Basically, a portion of every payment you make goes into this hidden savings account called cash value.
Your monthly contributions in addition to interest that it earns, causes this account to grow indefinitely.
Later on in life, you or the insured child can pull from this cash value account to help with college or other expenses (you could use the money for anything you want).
Guaranteed coverage in the future
Regardless of which life insurance company you buy from, every child policy will come with the guarantee that the child can buy more coverage later in life.
This additional coverage when they are older is not subject to underwriting. If they want more coverage, they are guaranteed to get it.
It is very uncommon for a child to have health issues that prevents them from qualify for life insurance as a young adult, but it does indeed happen.
A policy now guarantees their insurability later in life.
It is important to compare offers from multiple companies before you decide who to buy from.
The three most prominent children’s life insurance companies are Mutual of Omaha, Globe Life and the Gerber Grow Plan.
Below is a table to quickly compare them side by side.
You can see why Mutual of Omaha stands out as the best option.
|First Year in Business||1909||1951||1967|
|A.M. Best Rating||A+||A+||A|
|2019 NAIC Compaint Index (lower is better)||1.51||7.19||1.56|
|Unisex Rates||Yes||Yes||Yes (Not CA & FL)|
|$20k Cost For A 9 Year Old||$8.60||$8.50||$17.51|
|Included Riders||Guaranteed Insurability & Waiver of premium for owner death||None||Guaranteed Insurability|
|Grace Period For Owner’s Death?||90 Days||No||No|