A driver’s license in the hands of a 16-year-old opens up a whole new world of adventure, possibility and freedom for him and her. However, for the parents, that freedom brings up a whole new set of worries and questions: “Are my children where I think they are?,” “Are they driving responsibly?,” “Are their friends driving responsibly?” This is when insurance agents start to get questions from parents concerning life insurance for teens.
Auto Insurance Options
Many times parents are surprised to learn that they can purchase a limited form of life insurance on their auto insurance policy. For example, First Party Accidental Death coverage acts like a life insurance policy if you, your spouse or your resident children die as a result of a car accident only, even if you were a passenger in someone else’s auto. It literally can cost a few dollars a year and you can add up to $25,000 in Accidental Death coverage to your policy in Pennsylvania.
Another inexpensive option on your auto insurance policy is First Party Funeral Benefits coverage. This coverage works the same as Accidental Death coverage except the maximum benefit is $2,500 in Pennsylvania and benefit must be used for funeral expenses.
Life Insurance Options
Since the coverages offered on auto policies can be limited with inadequate benefit amounts, many families will look at a life insurance option. If you already have a life policy on yourself and/or your spouse, you may be able to add a Child Rider to one or both of your policies. This would insure your child for a set premium and a set limit, often between $1,000 and $10,000 per child. Again, this is very inexpensive and the premium for a child rider is the same whether you have one child or a dozen, so it is an especially good choice for large families.
If you are looking for more than $10,000 of coverage or you want your child to have their own policy, there are a wide variety of Universal, Whole and Term Life policies you can purchase for a child of any age. If they are under the age of 18 years, a child will most likely receive a standard life insurance rate, so, if your child is in good health with no medical issues, I often recommend applying for a new life policy once they are 18 years old, so they can receive the best life insurance rate and lowest premium.
Remember when you are considering life insurance for yourself or a child, it is not just about having enough money to cover the cost of a funeral, but to include funds to pay off emergency or long term medical expenses, college debts, estate settlement and other unexpected expenses.
Unfortunately, having enough life insurance won’t necessarily make you feel any better about tossing the car keys to your teen on a Friday night out with his or her friends, but it will give you some financial peace of mind as you raise your teen to become a safe and responsible adult.