Why buy life insurance for your child?

by | Feb 16, 2023 | Financial Tips | 0 comments

Many people traditionally think of life insurance as something you buy for yourself when you get married, have kids, buy a house, or are getting up in years. But why buy life insurance for your child or grandchild?

With Family Day just around the corner we want to share four reasons why buying life insurance for your child may be the right choice for you.

Reasons to buy life insurance for a child

life insurance for your child, acn financial insurance1. Permanent insurance at children’s rates

When you take out insurance on a child who’s young and healthy, insuring them is easy and affordable. Rates can change drastically over time depending on lifestyle, hobbies, career choices, or health challenges later in life. Insuring your child now locks in a low rate on that specific policy.

2. Stable investment option

Purchasing a life insurance plan for your child is also a stable investment option with tax advantaged growth. There may also be a cash value component that can be accessed to fund education,   or other needs. For example, if you were to pay premiums for 20 years at $2,400 annually ($48,000 total), your child can withdraw cash for 60 years at $4,800 annually ($288,000 total)*. 

The policy can be paid up in shorter terms, such as 10 or 20 years but continue as protection for their own family’s financial wellbeing down the line. The plan can also be a tax-efficient way to transfer assets to their heirs. It’s a great way for grandparents to build an asset for their grandchildren too!

3. Helping you prepare if the worst were to happen

No one wants to think about the possibility of losing a child. That being said, if the worst does happen, insuring a child can protect the financial security of your family. The loss of a child has the potential to cause physical and emotional stress that may impact yours or your spouse’s ability to make an income. Insurance can help reduce the financial burden for your family during that difficult time.

4. Plans can be customized to fit your needs

Whole life insurance includes guaranteed premiums, cash values, and a death benefit. You can choose between life pay, 20 pay (premiums payable for 20 years) or 10 pay (premiums payable for 10 years). There are also two plan types to meet short and long-term goals. In addition, you can customize your plan with a number of optional features. One example of this is a guaranteed insurability option, which allows the policy holder to purchase extra insurance as an adult without medical underwriting. See more details about this policy here.

Your family may also qualify for a monthly Canada child benefit that can be used to pay the premiums on your plan. Learn more about your eligibility for this benefit on the CRA’s website.

life insurance for your child, acn financial group

To learn more about insuring your child, contact one of our consultants at ACN Financial Group. We’d be happy to answer any questions you may have! 

*Speak with one of our consultants for up to date premium rates and dividend scale information. Cash withdrawals may be subject to taxation and a tax reporting slip may be issued.