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A Guide to Buying Life Insurance for Kids

It is uncomfortable to think about life insurance coverage for children. However, parents should be aware of why it is a wise choice. Purchasing life insurance for kids offers financial benefits that will serve children as they grow. 

If you are considering purchasing life insurance, work with a trusted agent. At Lake Region Insurance Agency, we offer a wide range of policy options to meet your needs. Call or visit our offices in Cokato, New London, and Willmar, MN, to get started.

We are proud to serve our clients in Greater Minnesota as independent agents. We can help you with all of your insurance needs, including life insurance for children.  

What Is Life Insurance for Kids?

A young family sitting on their couch and reading books to their young children.
Parents, grandparents, and other relatives often purchase children’s life insurance to protect a child’s financial future. There are significant benefits to getting a policy in place early in a child’s life.

Individual life insurance for kids comes as a whole life policy. It is a permanent plan that can stay in place throughout their life, rather than only for a set term. It also has a cash value that typically grows over time.

A whole life policy has a set cost, such as $50,000. And it has a specified number of years to pay for the plan. The longer you stretch the payments, the lower the monthly premium. Some parents or grandparents choose to have a short payment time. This smaller window makes for higher premiums, but the owner can give the child a paid-off policy once he or she becomes an adult.

Adults can purchase the policies for children through an agent. And as the policy’s owner, they can transfer it to the child at any time.

A second option for parents who want life insurance for their children is to add a rider to their own policy. That is, if you, as the parent, have a term life insurance plan, you can ask your agent to add your kids to it. 

Adding kids to your existing policy is very inexpensive but has more limited benefits. For example, it will not accrue any cash value.

What Do I Need To Know About Buying Kids’ Life Insurance?

A smiling and laughing family of three.
Purchasing life insurance for a child is relatively uncomplicated. You will complete an insurance application for them, but they are not subject to any medical exams

Once the application is complete, an underwriter will review the paperwork. Generally, you can buy life insurance for kids if they are 17 years old or younger. Speak with an independent agent to get the best policy recommendation for your family. 

Most parents and grandparents choose to transfer ownership once the child reaches adulthood. And some policies automatically shift to the child once they reach a certain age, usually 21 years old.

Why Would I Buy a Life Insurance Policy for a Child?

An insurance agent with paper cut outs symbolizing auto insurance, home insurance, and insurance for kids.
There are several reasons why purchasing a life insurance policy for kids may be a good option for your family. 

  • Investment Vehicle – Many adults purchase life insurance plans for children because of the cash accrual. The younger the child, the higher the premium percentage that goes toward savings. The cash value grows over many years, and the policy owner may cash in or surrender the policy for payment at any point. There is often a surrender fee that applies. The child may choose to cash in their plan to have money available for things like college, their wedding, or a down payment for a home.
  • Tax Benefit – There is a potential tax perk to the plans, as the cash value growth is tax-deferred. That is, the cash value does not count as income until the person withdraws it. Taxes apply only on withdrawals that exceed the premiums paid for the plan. It is best to speak with a tax advisor for specific advice about your circumstances.
  • Lock In Insurability – When you buy a life insurance policy for a child, it ensures that they are insurable for their whole lives. Assuming they keep the policy active, they will not lose that level of coverage. This benefit is critical if they develop a medical condition that would make them uninsurable later in life. It also gives them coverage if they end up with a high-risk job or hobby as an adult. Many careers and hobbies make it difficult for people to get a policy.
  • Funeral Expenses – Finally, the policy will provide funeral and burial coverage in the event of a child’s death. This benefit can alleviate an otherwise significant financial burden to families at the worst time of their life. 

What You May Need to Consider Before Purchasing a Policy

A couple purchasing life insurance for kids.

It is important to look at your savings, budget, and allocation of investments before purchasing life insurance for kids. It is wise to meet with a financial advisor to look at your entire financial picture to know how much you can allocate toward additional insurance options. 

Before you consider buying a life insurance policy for your child, be sure you have sufficient coverage for yourself. Protecting your family’s finances if you pass away needs to be the top priority. Once you have that in place, talk with your insurance agent about available plans for your children.

Let’s Discuss All of Your Life Insurance Options

A parent and child holding a red heart in their hands, symbolizing life insurance for kids.
No matter what type of policy you need, be sure to find an agent you can trust. Lake Region Insurance Agency has been serving Minnesota families for decades.

Whether you need health, auto, home, or life insurance, we can find what you need. As independent agents, we do not have to rely on just one company. We can search through hundreds of policies to find the perfect fit for you. 

Our friendly team will help you secure the right coverage and the peace of mind that it provides. Contact us for a free policy review and quote. You’ll be on your way to financial security for your family.

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How Do I Purchase Private Health Insurance For My Family?

Right now, millions of Americans are without medical coverage. This situation is leading many to wonder how they can purchase private health insurance for themselves. 

Medical debt can be devastating and is a significant contributor to people needing to file for bankruptcy. One hospitalization can cost tens of thousands of dollars or more. If tests or procedures are necessary, the bill can skyrocket. Even outpatient costs can be shockingly high if there is no medical insurance in place.

Lake Region Insurance Agency is proud to serve its neighbors in Greater Minnesota. Our independent brokers are not tied to one company or product to find the right fit for you.  

Our health insurance products cover individuals, families, and businesses. Let us assist you in making a sound and informed decision about your health insurance needs. Call today for an insurance review or quote. 

Purchase Private Health Insurance on the Marketplace

Private health insurance is medical coverage that does not come through an employer. Job-based insurance only remains while you work for that employer. If your job ends, you are no longer eligible for their group health insurance plans.

To buy your own policy, it is best to work with an independent insurance broker to find the right option. Most people who need private insurance go through the health insurance marketplace. It has information about the available options and how to buy insurance. In Minnesota, the marketplace used to purchase private health insurance is MNSure

Need to buy private medical insurance

By using the marketplace, also known as the health insurance exchange, you may receive credits to lower your private health insurance premiums. Brokers help find the plan that will cover your needs and give you the full assistance for which you qualify. 

Typically, you need to provide documentation of your household’s income. So the exchange may ask for pay stubs and tax returns to verify your eligibility for the marketplace policies.

If you qualify for low-income or free health insurance, you will not purchase coverage from the marketplace. In this case, insurance options will be available through a government-sponsored program such as Medical Assistance or Minnesota Care. The Department of Human Services manages these programs. 

Affordable Care Act

All plans offered on the health insurance marketplace meet the Affordable Care Act (ACA) baseline for benefit standards. The ACA is the legislation that provides financial help in the form of tax credits or subsidies when buying insurance. 

Individuals and families have to fall within specified income ranges to qualify, and it can be quite confusing to understand all the intricacies. Though you can shop and compare plans yourself, many people prefer to work with an independent broker. This step can bring significant peace of mind.

Open Enrollment Periods for Private Health Insurance 

Every year, the health insurance exchange has a designated open enrollment period when you can purchase new coverage. In most states, this period runs from the beginning of November through mid-December, but be sure to check with your broker for specific dates.

Open enrollment dates for medical insurance

You could be eligible for a special enrollment period if you experience a qualifying life event. These events include:

  • Job Loss – Even if you leave a job voluntarily, if it causes you to lose insurance, you likely will be eligible for a special enrollment period.
  • Finishing College – Many students are on their parent’s medical plan. But once they are no longer in school, they must get their own coverage.
  • Divorce – If you had insurance under a spouse’s plan, you might be able to enroll in a new policy outside of open enrollment.
  • Moving Towns – Some insurance plans only cover specific areas. If you move outside your insurer’s service area, you should be eligible for special enrollment.
  • Family Size Changes – A special enrollment period begins if you have a child, adopt a child, or a child moves out of your household. 

Typically, you have 60 days from the qualifying life event to purchase a new plan. Your broker will be able to help with this.

Private Health Insurance Company Options

You also can purchase your medical coverage directly from an insurance company rather than through the exchange. If you don’t qualify for subsidies or don’t want to take advantage of them, this can be a simpler path.

Your independent agent will work with you to determine the right fit. They will look at your preferred doctors and hospitals and any medications you need to cover. Then they show you the options available and help you choose one and enroll.

How To Choose the Right Private Health Insurance Plan

There is a lot to consider when selecting a plan. For most people, they will have the policy for at least a year due to enrollment restrictions. So, you want to find the best option for your needs.

It is helpful to estimate your current healthcare costs before you purchase private health insurance for your family. Having a clear picture of ongoing medications and treatments will guide you as you select a coverage plan.

Using an Insurance Broker

The health insurance world is confusing. Whether you use the marketplace or not, it is challenging for non-experts to know all of the intricacies of different options. 

An independent broker will help remove the confusion. They do this all day long and understand all the jargon and terminology. And they can look at all available plans quickly to give you the best information possible.

When working with an agent, be ready to provide the following information:

  • Preferred Providers
  • Preferred Hospitals or Facilities
  • List of Prescription Drug Needs
  • List of Ongoing Therapies – physical, speech, occupational, etc.

Your health insurance broker will be able to save you time and money while they search for the perfect product to meet your needs

Let Us Help You with This Critical Piece

Do not risk financial devastation by going without health insurance. Let the Lake Region Insurance Agency team find the right fit for your circumstances. 

Our friendly staff has been caring for our neighbors in Willmar, Cokato, and New London, MN, for years. Stop in or give us a call today to get started on finding your next medical policy.