Why Insure Children?
No parent likes to think of the possibility of losing their child to illnesses or injuries; however it is important for parents to understand that at times things happen that are beyond one’s control and at such times we have to protect our loved ones as much as we can.
Life insurance for children does exactly this, when a child is ill and has only a few months to live. These plans ensure that your child can live comfortably if he is diagnosed with a critical illness. These plans also pay a onetime compensation payment if your child passes away due to insured reasons.
The purpose of the onetime compensation payment is to ensure that all outstanding medical bills of the child are paid and the family doesn’t go into debt or isn’t forced to file for bankruptcy due to unpaid medical bills.
Children’s life insurance plans also ensure financial support for the grieving parents; especially if they have to take off from work. These plans can also pay for funeral expenses and can prevent the family from having to take extra financial debts to pay for funeral arrangements.
Life Cover Options
Insurers in Australia may offer stand alone plans for children, combined plans for families or free add on plans for children. Stand alone plans for children are charged separately and the buyer has to pay premiums once a month or annually. Combined plans for families are all inclusive plans meant for 3-4 family members.
Some insurers also offer free add on plans for children when one or both the parents have a life insurance plan with that particular insurer. All 3 options are available to Australian buyers who are permanent residents of the country and meet certain eligibility criteria.
What Does Children’s Insurance Cover?
- To be eligible to get children’s insurance, the child has to be an Australian resident and has to be between the ages of 2 – 17 years. The minimum benefit amount offered for these policies is usually $20,000 but can be as high as $50,000. Some insurers may allow buyers to choose lower or higher insured amounts and may offer one or two additional benefits. Trauma insurance plans are usually incorporated in life plans for minors.
- If a family has more than one child, then they can either opt for separate policies for each child or a combined policy for the family. Insurers that offer combined plans for the parents and 2 children, may have different eligibility and claims criteria. The cost of combined plans is usually lesser than purchasing a separate plan for each member of the family.
- Children’s insurance pays the parents or guardians of the child a benefit in some scenarios, such as accidental death, injuries that result in paralysis, Blindness, Deafness, Encephalitis, Meningitis, Total & Permanent Loss of Use of Two Limbs and Major Head Trauma. The benefit payment is given when the child suffers from one or more of the problems mentioned above.
Limitations of Children’s Life Insurance Plans
Some families may face certain insurance related problems when they ask the insurer to pay a benefit payment in the event of trauma or death of a child. Hence, before applying for a children’s insurance plan, it is important to check with the insurer regarding limitations and it is also important to read the policy disclosure statement carefully. Some of the common limitations of these contracts include:
- Claims are not accepted during the waiting period. Claims are only accepted during the benefit period or while the policy is active.
- Claims are not paid out in case of a congenital condition or the intentional act of the policy holder.
- Additional conditions or restrictions may apply to the policy if the policy holder opts for exclusions, premium loading fees or any other restrictive terms.
Important Information regarding Life Insurance for Children
Although each insurer has their own terms, listed below are some things buyers should keep in mind when they purchase a policy from Australian insurers.
- There are many insurers in Australia that offer competitive priced life covers for children. These plans can not only be viewed online but can also be purchased either from the insurer’s website or from an insurance agent’s website. Buyers who want to purchase plans directly from insurers’ should note that they may not be able to compare plans or get multiple quotes on such websites. Buyers who want to purchase plans from insurance agents or comparison websites should note that they compare two or more plans online and can get multiple quotes from these websites.
- A few ways to lower the premiums of these plans include, choosing a length waiting period, choosing a plan with a short term and opting for a plan with limited benefits. Opting for a lower insured amount can also help you lower the cost of the premiums payable to the insurer.
- Other good ways to lower the premiums include, comparing plans before purchasing, choosing a plan that may offer additional benefits such as tax benefits for no cost and comparing plans online through the help of a free comparison website.
- Comparing plans before purchase has two main benefits that are; they help the buyer understand the various features offered by good plans and they help the buyer understand the fee structure along with limitations of the selected plans.
Although no parent would like to say good bye to their children and see their child leave this world before they do, at times unforseen things happen to many people and being prepared for the worst is a good way to protect the surviving members of the family. Purchasing a life cover for children doesn’t have to be expensive if you follow the tips mentioned here.
Remember choosing a longer waiting period may help you keep the premiums down but this can also mean that the insured person and his family will not be financially protected in case something happens while the waiting period is active.