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In today’s world, securing the well-being of our children extends beyond providing daily care and nurturing their dreams. As parents or guardians, safeguarding their future against unforeseen challenges is a responsibility we take seriously.
Child critical illness insurance protects against the financial strain that may arise if a child encounters a severe health setback. This specialized coverage offers peace of mind and practical support, ensuring that in the face of a critical illness diagnosis, the focus remains on the child’s recovery rather than financial worries.
This post explains what child critical illness insurance entails, why you need it, and the type of coverage to get. Read on to equip yourself with the essential knowledge to make a well-informed decision.
- Key takeaways:
- Child critical illness insurance pays you a lump sum benefit to provide financial protection in the event of a severe health crisis to your child.
- On top of the 25 illnesses that adult plans cover, children's critical illness policies also cover five childhood illnesses.
- Buying it at a younger age ensures your child continues to receive coverage into adulthood.
What Is Critical Illness Insurance For Children?
Child critical illness insurance is a specialized policy designed to provide financial support if your child suffers a serious illness. Let’s take a look at how it works.
How does critical illness insurance work for children?
A standard critical illness policy often covers around 25 illnesses. If your child is diagnosed with a covered condition, the insurance company pays you a tax-free lump sum benefit. Among the frequently claimed illnesses are cancer, heart attack, and stroke, representing some of the most prevalent health concerns.
Unlike life insurance, child critical illness insurance doesn’t require your child to pass away for the benefit to be paid out. Instead, it triggers upon the diagnosis of a covered critical illness, which can vary among policies and insurers. The policy’s effectiveness largely depends on the specific illnesses covered, so it’s crucial for parents or guardians to thoroughly understand the policy terms, the list of covered critical illnesses, and any exclusions.
What are the benefits of child critical illness insurance?
This lump sum payment can be used at your discretion to cover additional expenses, such as prescription drugs, alternative treatment, transportation costs, and treatment abroad. You can even use it for recurring expenses like rent or mortgage payments or replacing lost income.
It offers a financial safety net during a difficult time, ensuring that families can focus on the child’s recovery without being burdened by financial worries. Above all, it enables you to step away from work, ensuring you’re right where your child needs you the most—by their side.
What does a child critical illness insurance cover?
Similar to an adult policy, a child critical illness plan typically encompasses 25 conditions, including life-threatening ailments such as cancer, heart attack, and stroke, which constitute the majority of claims made. Here is a list of the 25 common illnesses covered:
- Acquired brain injury
- Aortic surgery
- Aplastic anaemia
- Bacterial meningitis
- Benign brain tumour
- Blindness
- Coma
- Coronary artery bypass surgery
- Deafness
- Dementia, including Alzheimer’s disease
- Heart attack
- Heart valve replacement or repair
- Kidney failure
- Life-threatening cancer
- Loss of limbs
- Loss of speech
- Major organ failure on waiting list
- Major organ transplant
- Motor neuron disease
- Multiple sclerosis
- Occupational HIV infection
- Paralysis
- Parkinson’s disease and specified atypical Parkinsonian disorders
- Severe burns
- Stroke
Beyond these conditions, insurance policies tailored for children often extend coverage to an additional five childhood illnesses. These may include:
- Cerebral palsy
- Congenital heart disease
- Cystic fibrosis
- Muscular dystrophy
- Type 1 diabetes mellitus
A few companies also cover Rett syndrome, autism, Down syndrome. However, the diagnosis must occur before your child’s 25th birthday to claim for any childhood illnesses.
Also, it’s important to note that cardiovascular conditions require a 30-day survival period after diagnosis before the benefit payout.
How much coverage should you get for your child?
While many insurance companies cap their coverage at $250,000, certain providers may extend this limit to $1,000,000, subject to specific conditions being met. The available coverage your child can get is determined as the lesser of the following:
- $1,000,000
- The personal coverage amount that you have
- The total critical illness insurance applied for and currently active among all siblings of your child
Therefore, if you have multiple children, they will all need the same coverage amount.
When should you buy a critical illness insurance policy for your child?
The ideal time to purchase a critical illness insurance policy for your child is typically when they are healthy and young. Buying the policy early ensures coverage before any potential health issues arise, as pre-existing conditions might not be covered or could affect the policy’s terms.
Moreover, premiums tend to be lower when the child is young and healthy. Considering this, it’s important to note that children’s critical illness policies typically have an age limit ranging from 30 days old to 17 years old.
Can your child qualify for critical illness insurance?
To qualify for child critical illness insurance coverage, the underwriter considers their medical and family histories to evaluate overall risk.
Your child’s critical illness insurance plan may involve an additional premium if there is a single occurrence of breast, ovarian, or colon cancer or type 1 diabetes mellitus in your immediate family.
However, it’s important to note that certain pre-existing conditions are considered uninsurable, including:
- Acquired brain injury
- AIDS or a positive HIV test
- Aortic surgery
- Aplastic anemia
- Autism
- Bacterial meningitis*
- Benign brain tumour
- Cancer*
- Cerebral palsy
- Congenital heart disease
- Cystic fibrosis
- Diabetes
- Haemophilia
- Heart attack
- Heart valve replacement or repair
- Hepatitis (chronic)
- Kidney disease (chronic) or kidney failure
- Major organ failure on waiting list
- Major organ transplant
- Multiple sclerosis
- Muscular dystrophy
- Permanent paralysis
- Stroke
* Some exceptions for bacterial meningitis and cancer (including most non-melanoma skin cancers) apply.
Does your critical illness policy cover your child?
You have two options to insure your child: as a rider on your own critical illness insurance plan or through a stand-alone policy. Opting for the rider offers the advantage of a level premium even if you have multiple children. However, the coverage limit is typically capped at $50,000.
It’s worth noting that most child critical illness insurance riders expire when the child reaches age 25, so ensuring convertibility to another plan is crucial if you aim to extend the coverage into adulthood.
Another drawback is that your child’s coverage is tied to your policy—if you cancel yours, your child’s coverage also ends.
What type of critical illness insurance should you get for your child?
Within stand-alone plans for child critical illness insurance coverage, various types are available. Apart from policies that terminate at age 25, options include term-10, term-20, term-65, and term-75. These plans extend for 10 years, 20 years, until age 65, and until age 75, respectively.
Alternatively, you can opt for term-100, ensuring lifelong coverage. While the premiums could be payable for life, many insurance companies offer a limited pay option. This option allows you to complete the policy payments within 10, 15, or 20 years. Once you fulfill these payments, the policies are considered paid up, relieving you of the financial obligation of insurance premiums for the remainder of your life. Because of the compressed payment schedule, limited pay policies typically cost the most.
What if your child never makes a claim upon reaching adulthood?
Fortunately, the majority of children aren’t diagnosed with a covered illness before reaching adulthood. But what happens to your child’s coverage at that point? If you initially purchased a shorter-term policy, look into whether it’s convertible into a longer-term plan.
On the other hand, if you opted for a permanent policy, the coverage continues as long as you pay the premiums, offering valuable protection as your child transitions into independence. It’s even possible to transfer ownership of the critical illness policy to your child, granting them complete control over it.
However, several policies offer a return of premium on surrender option. This add-on rider lets you to cancel the policy and receive a refund of all the premiums paid thus far. You might direct it towards bolstering your retirement savings, providing a financial cushion for the future.
Alternatively, you could gift it to your child, offering support for their education, purchasing a vehicle, making a down payment on a home, or contributing to their savings for their long-term endeavors.
What other insurance coverage does your child need?
Apart from child critical illness insurance, whole life insurance is another financial instrument that provides long-term benefits. A whole life insurance policy generates dividends, typically reinvested to bolster the policy’s cash value and death benefit.
As it compounds over time on a tax-deferred basis, the accumulated values could grow substantially by the time your child reaches adulthood. These funds become accessible for your child’s future necessities, such as purchasing a home or starting a business venture.
Frequently Asked Questions
Is critical illness insurance worth it for children?
Yes, the financial protection from the benefit payment offered by child critical illness insurance during unexpected health crises makes it a worthwhile consideration.
What is the minimum age for critical illness insurance?
Minimum ages for child critical illness insurance vary by provider but commonly start at 30 days old. You can buy it for your child until they reach 17 years old.
Need A Child Critical Illness Insurance Quote?
Child critical illness insurance stands as a crucial safety net for families, offering invaluable financial support during unexpected and challenging times. As a parent or guardian, safeguarding your child’s future health and well-being is paramount, and this specialized insurance protects against the financial impact that critical illnesses may bring.
Understanding what child critical illness insurance entails and its inherent benefits—covering a spectrum of critical illnesses, providing a tax-free payment upon diagnosis, and offering peace of mind—underscores its significance. This coverage isn’t just about financial security; it’s about ensuring that, in the face of a health crisis, your focus remains on your child’s recovery rather than financial worries.
For a complimentary consultation, reach out to us at info@briansoinsurance.com or 604-928-1628. You can also use the form below to request a quote, and we’ll diligently explore the market to secure the most fitting coverage options tailored to your child’s needs.
Get Your Critical Illness Insurance Quote Now
While we make every effort to keep our site updated, please be aware that timely information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Brian So Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser. This post is a brief summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details which can be provided upon request. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders.
