Looking for extra protection for your child on your term life insurance?
Watching your child suffer a serious injury or illness is every parent’s worst nightmare. But not only can such an event be hugely stressful and have an enormous emotional impact, getting the best treatment for your little one can often be very expensive.
This is why child life insurance can be such a sound investment for any parent. This type of insurance cover provides a lump sum payment if your child dies, is diagnosed with a terminal illness or suffers a specified medical condition such as brain damage, cancer or severe burns.
Child life insurance is designed to ease the financial burden on families who find themselves in an unenviable situation, and the funds can be used to cover medical treatment or rehabilitation, cover travel costs, help you take time off work, or even book a family holiday to help you relax and recover.
What types of child life insurance are available?
There are two different types of child life insurance available, each of which has its own benefits and features:
- Child Rider on Term Life Insurance. Under this type of cover, you will receive a lump sum benefit payment if your child dies or is diagnosed with a terminal illness. Children must be aged between two and 18 years to qualify for this cover, and any eligible children are usually automatically covered by this rider. Your other children will still qualify for this benefit even if you’ve made a claim for another child. A typical benefit structure would see a policy pay out the lesser of either $20,000 or 10 per cent of the sum insured under your life insurance cover.
- Children’s Trauma Insurance. Under this type of cover, your insurance provider will pay a lump sum benefit if your child is diagnosed with one of many serious illnesses. Illnesses typically covered include Hodgkin’s Disease, invasive cancer, skin cancer, leukaemia, heart attack, stroke, bacterial meningitis, blindness, coma, kidney failure, loss of hearing, loss of use of limbs/sight, loss of speech, major burns, major head trauma, major organ transplant, paraplegia and quadriplegia. Children must be between two and 18 years of age and this benefit covers all of your eligible children. Only one payment will be made per child, but a payment on one child will not affect your ability to make a claim for another child.
When does Child Life Insurance Finish?
Child life insurance policies typically expire around the first policy anniversary following the life insured’s 18th birthday. Once your child has turned 18 there are a couple of different options available to them.
Within 30 days of the first policy anniversary following the insured eligible child’s 18th birthday, he or she can apply to your insurance provider for a new death and trauma cover policy for the same benefit amount. In most situations the new policy will be subject to standard policy issue requirements, for example an assessment of your child’s smoking status, but no other health aspects will need to be reassessed or tested further.
The policy your child is provided with will be the product that offers the most comparable cover to the policy they were previously insured under. Any exclusions or loadings that applied to the original policy may also carry over to the new policy.
Another available option is to simply terminate the child cover option from your life insurance policy when your child reaches a certain age. This usually takes place on the policy anniversary following your child’s 18th birthday.
When will a Child Term Life Insurance Policy Not Be Paid?
- If a claim arises directly or indirectly from an intentional self-inflicted act or attempted suicide.
- If the claim arises because of an intentional act by the policy owner or someone else who stands to receive the benefit payable.
- If a condition is diagnosed, first becomes apparent or a recommendation of the need to have surgery occurs within three months of the benefit start date.
- If a condition is diagnosed, first becomes apparent or a recommendation of the need to have surgery occurs within three months of any increase in cover you may apply for.
- If a condition is diagnosed, first becomes apparent or a recommendation of the need to have surgery occurs within three months of the latest reinstatement of your policy.
Make an Enquiry for Child Cover From Australian Insurance Providers
If you are interested in taking out protective cover for your child, you can make a secure enquiry online to compare policy options with an insurance specialist. An insurance specialist will compare different policies for you that offer child term life cover or critical illness cover. Speaking with a specialist and there is absolutely no requirement to sign up for cover.