Life Insurance Index

Practically the minute your new baby is born you are bombarded with marketing literature and applications for life insurance stating that buying insurance is not only practical but a good way to ensure that your child is protected or that they will benefit later in life. Some of the marketing literature appeals to your emotions (which is perfect after seeing your new bundle of joy) while other literature uses guilt tactics by suggesting that your child will be deprived if you do not buy a policy. Ultimately, the decision is up to you whether or not you think your child or your family as a whole will benefit from a life insurance policy for your child. The best thing to do is educate yourself on the overall process and reasons for why life insurance is a necessity for young families. If you do decide to buy a life insurance policy for your newborn or child, term life insurance seems to be the best policy to purchase.

To be sure, newborns and children are not the breadwinners for families. As coarse as it may sound, the reality is losing a child will not devastate a whole family in terms of financial ruin if, for instance, the entire income of the mother or father should disappear. The whole purpose of life insurance is to make sure that your family can maintain their current lifestyle or that your children will be able to attend college should you or your spouse become deceased. An insurance company would surely wonder if you took out a huge policy on a newborn or young child, so realistically, the benefits for someone so young would not support a family. The problem with insurance companies suggesting that a family is depriving a child down the line if they do not purchase insurance causes a couple of problems. If parents do indeed decide to insure their newborn or young child they often neglect to buy enough insurance for themselves because they look at the overall budget for policies versus the payout. Second, while it appears that a life insurance policy will serve as a savings account should the child survive the policy by building cash value equal to or greater than the premiums paid, there really are better vehicles of savings than an insurance policy. Any financial advisor would choose a college 529 plan over an insurance policy.

One of the reasons that level term life insurance is a fair bit cheaper than other life insurance is because the insurer only has to make a payment if the insured party passes away, and even then the insured party has to die during the term of the policy for the next of kin (or the named beneficiary) to be eligible for a payout. One of the great things about levels term insurance is that you can benefit from cover for just a few pounds each week, and because the payments remain the same throughout the term of the policy, you’ll never have to worry about rising payments. The reason why a level term insurance policy is so called is because the repayment remain level throughout the term of the policy, so you will never have to worry about the cost of your policy rising. The policy is also taken over a fixed term, which is where the ‘term’ part of the policy comes in. This means that you can enjoy easy budgeting and low cost repayments, and you’ll know exactly how long you will be making payment for. On the downside, once the policy expires you will not be able to reclaim any money and the policy will be cancelled, so you will then need to look at taking out alternative life insurance cover.