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  • How does my age affect life insurance rates?
  • March 1, 2014
  • It is not unheard of for an insurance company to write a policy on the life of a child just a few weeks old, and a large volume of juvenile insurance applications are often sought to minimize the possibility of adverse selection, notes Graves.

    For one, the amounts of  coverage provided by a juvenile insurance policy is far less than the amounts available to adults, though most companies must first see that the amount of children’s life insurance is needed if other family members also have an insurance policy in force.  Graves points to the fact that children also have a low mortality rate, which is attractive for insurance companies. Also, the death rate is usually very low until the age of 10, with exception to the first weeks after birth. This period of high mortality can be avoided by limiting coverage to children who are 6 months or older.

    But according to David Fier, vice president with Gerber Life Insurance Company, the majority of parents and grandparents who purchase life insurance for their children don’t intend to use it for the death benefit.

    “It’s primarily used as a gift for their child,” Fier says. “A whole life policy builds cash value, has a lot of benefits, and gives the child the option to purchase more coverage or cash it in when they turn 21. It’s really an affordable way for them to put money aside for their child’s future.”

    The largest policy Gerber Life offers is $50,000, which would have a premium of $20 per month. However, the average policy purchased for a child is $20,000 to $25,000, which would cost about $10 per month. Policies are usually purchased for children before they reach the age of 2.

    “It’s important to understand why people do it,” Fier says. “It’s a fairly inexpensive way for people with limited means to prepare for their child’s future. Once the child grows up, it guarantees them insurable and the premiums will never increase unless they decide to get more coverage.”

    Although medical exams are not required for juvenile insurance, family finances are required because economic status generally has an influence on mortality in children.

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