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Can I buy life insurance for my child in the United States?What kind of insurance is good for newborn babies?What are the advantages and disadvantages of buying life insurance for children?

Can I buy insurance for my child in the United States?Can newborn babies buy insurance?Can I buy insurance for my child separately?Is this insurance medical insurance or commercial insurance?What is the difference between these two types of insurance?Faced with a series of questions about "Buy insurance for your child in the U.S."For the question, the American Life Insurance Guide Network invited a columnist Heather Xiong CFP®️, Through the form of question and answer, detailed explanation in this article.

newborn baby life insurance policy

Can children buy insurance?

Yes it is.You can apply for commercial insurance.

What is the difference between a child's purchase of life insurance and medical insurance (health insurance)?

In daily life insurance, we usuallyCan confuse "life insurance" and "medical insurance (also known as health insurance)"Case.

Medical insurance (also known as health insurance) is a protection provided by the government at the leading level; while life insurance is a protection provided at the level of commercial companies.

Under the existing laws in the United States, for minor children or newborn children, their "medical insurance protection" follows the "medical insurance" of their parents.The child’s medical insurance can stay with the parents until the age of 261.

The protection of commercial life insurance companies is a market act.Newborn children can apply for purchase.Usually, the parents will becomePolicyholder.However, there are certain restrictions on children's purchase of commercial insurance, which I will analyze in the next content.

What are the advantages of buying life insurance for children?

When economic conditions permit,Child buys life insurance, According to the purchasedLife insurance products, Which is different from the way of purchasing configuration, has the following three major advantages:

  • Lock insurability and guarantee rights.As children grow up throughout their lives, they may encounter various congenital or acquired health conditions.After the child shows these changes in health, no life insurance company may be willing to continue underwriting.
  • Conducive to the accumulation of cash value.We all know that the younger the life insurance, the lower the cost.For children to purchase "cash value type" life insurance,"Time" is the biggest wealth accelerator——The accumulation time that a child has is the longest.When the snowball of the policy cash value account rolls up, we can withdraw and spend on any aspect——It can not only pay for the child’s college tuition, pay the down payment when buying a house when they grow up, pay the child’s wedding money, and even use it as the start-up capital for entrepreneurship, the child’s long-term retirement account, and so on.From an interest rate perspective, the cost of borrowing from a life insurance company is usually much lower than the interest rate for borrowing from a bank or credit card.All of these are important pillars for financial independence.
  • Life-long wealth.Although giveChild buys life insurance, Is not on the child’s own wish list, but for families with ample financial resources, this is not only a good means of family financial planning, but also a practical way of family wealth education.Purchase and design insurance accounts for your children. As the children grow up, they can cultivate the financial concepts of "savings" and "compound interest" for their children, and even pass on the ownership of insurance policy accounts after they reach adulthood.the whole process,Not only can children get more financial protection, but it can also help children establish the correct concepts of "financial management" and "wealth accumulation" before entering the society.

(>>>Recommended reading:How to use index insurance to carry out 2-in-1 financial planning for children's "education savings plan" and parents' "retirement income"?What are the advantages?

Case comparison of children paying the first payment for buying a house

To illustrate the image"The younger the age, the more conducive to the accumulation of cash value"This concept. Let's assume that a minor who is insured at the age of 0, 5, and 10, opens 3 individual life insurance policy accounts, and each life insurance policy account deposits US$1 each year for 12 consecutive years. The life insurance company that chooses to insure, the insurance products, the design plan and the parameters are exactly the same. Then when the children grow up and reach the age of 26, they are ready to buy a house and pay the down payment.

At this time, by comparing the predicted cash value of the three policy accounts, it can be reflectedThe age factor of insured and the importance of time.

Children-life-insurance-policy-cash-value-compare

In the comparison of the above figure, we can intuitively see that the "time" for the cash value of the insurance policy insured at the age of 0 is the longest.The insurance policy that was insured at the age of 10 received the shortest increase in cash value "time".In contrast, with the same premium input, in the insurance policy account that was insured at the age of 0, the down payment that can be used to pay for the house($ 411,625), In the case of insured younger than 10 years old($ 201,489).That's 104% more.

What are the restrictions on children buying life insurance?

After comparing and analyzing the above advantages, I will introduceRestrictions on children's purchase of life insurance, Or "disadvantages".

The first disadvantage is that althoughChildren can buy insurance, But some life insurance companies,Life insuranceAnd products, it does not cover and sell minors.

Second, even some life insurance companiesAccept minor children, or newborns, minor children or babies of foreigners in the United StatesHowever, from the perspective of the Internal Revenue Service, it will not allow wealthy families to take advantage of their children’s "life" cycle.Hide money. "

Based on various factors, some American life insurance companies that insure newborns and minors areChild buys life insuranceThere are different restrictions in each situation, but in general, they mainly focus on the following points:

  • Sum assuredGenerally not more than $50 to $100 million;
  • Both parents must have the same amount of insurance (not limited to insurance types);
  • All children in the family are covered equally;
  • Physical condition is healthy and insurable;

In reality, these types of life insurance companies specifically provide the category of "teenagers" in the health rating form of policyholders, and provide friendly commercial life insurance services for children and families who meet the conditions for insurance.

baby child life insurance

Article summary

To sum up, inU.S. buys insurance for childrenIs a common thing,Newborn babies can also buy life insurance.

For children, "time" is their most valuable capital,life insurance, It is a financial tool that amplifies this "capital".

Buy life insurance for your child, Is a scientific selection and program design process.For example, use whole life insurance forUniversity tuition(Education fund) When planning a special project, it is first necessary to evaluate whether the child’s current age is suitable for use "life insurance"This tool can be used for planning, can it be fully utilized"life insurance"The efficiency of this financial tool. The second is to verify and improve this efficiency by comparing the products and design schemes of different life insurance companies.

In the real market, although babies are eligible to apply for purchase,But some whole life insurance products are not suitable for cash value accumulation.Secondly, differentWhole life insuranceAnd different life insurance products,Its potential to accumulate cash value can be high or low.

At last,Protect the parents first, then protect the children,It is a more scientific order of insurance.After understanding the above steps and tricks, buying life insurance for your children can be a relaxing and enjoyable educational experience.In professionalLife Insurance Financial AdvisorWith the assistance of, we can jointly select insurance products and make the right design plan. We can not only buy satisfactory insurance for our children, but also achieve the goal of material accumulation and spiritual inheritance of family wealth.

appendix
01. "Young Adult Coverage", US Department of Health & Human Services, https://www.hhs.gov/healthcare/about-the-aca/young-adult-coverage/

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