Setting it up at kid’s rate
Another benefit of starting early is, the premium is based on kid’s rate. It’s a great gift for the child because if the plan was set up since birth, for the same coverage as adults, the premium is much lower.
Life insurance used to have only one option of having premiums payable for life. With time, plans have enhanced and life insurance now have the option of 10-25 years of premium terms.
“I have to continue with the premiums of the life insurance plans that my parents set up once I started working. I don’t know what was set up and I have to contribute as long as I want to keep the plan.”
This is a typical statement by children who inherited plans that are payable for life. More often than not, they don’t appreciate the plans set up as it’s something they have to upkeep as long as they want to keep the plan.
However, if the plan has a limited premium term and it is fully funded before the child starts working, it’s one of the best gift that we, as parents can give. Even if there’s a few remaining years of premium before the plan is fully paid, it’s an easier plan for the child to take over versus a plan that is payable for life.
In addition, waiver of premiums can be added to a kid’s insurance plan, meaning if death, disability or critical illness happens to the payer i.e. parent, the premiums will be waived. This ensures that coverage on the child doesn’t have to be compromised when things happen to the parents (which will affect the sustainability of the premiums) and the child is guaranteed of a proper coverage for life once it’s set up.
You can download this “Guide to life insurance plans for kids” for a better understanding on the different type of insurance plans that can be set up.
(NOTE: Get our Guide to Life Insurance for Kids for a better understanding on the different type of insurance plans that can be set up. Get your guide Here)
There are more advantages setting up a plan early than delay or procrastination.
Good health is a gift, it’s not an entitlement.
Remember to plan early!!
Article by Sheela Tay Siew Ling (ChFC, AFC)