When you become a parent there are no bounds to the number of concerns you have for your child and hopefully cancer will never be one worry that becomes a reality. While medical treatments are advancing every day, it’s a hard road and one that can have a lasting impact, not just on their health.
Life insurance options will be hard to come by with a cancer diagnosis, even after treatment. When your child becomes an adult, having a history of cancer will affect their ability to buy a life insurance policy or at least qualify for one that’s affordable. In today’s article, we’ll go over what you need to know about life insurance and childhood (pediatric) cancer.
Buying Life Insurance Before a Childhood Cancer Diagnosis
Buying life insurance on your children can be an unsettling thought. In your eyes, your children will live forever and even thinking about your child having cancer is not something you want to put into the universe. But buying life insurance on your children can end up being very beneficial for them as well.
Children’s Life Insurance Rider
The easiest way to buy life insurance on your child is to add on a child rider when you purchase your individual life insurance policy. A child rider provides a payout should the worst happen. It’s not usually a large amount but enough to pay for a funeral without worry.
» Compare: Term life insurance quotes
Child riders are very inexpensive, typically $50 annually for around $10,000 in coverage and one rider will cover all of your children. This coverage ends when your child reaches age of majority, which varies depending on the life insurance company, but will generally range somewhere between 18 and 25. However, the rider can be converted into a standalone permanent life insurance policy.
A child rider provides other benefits as well. The rider protects your child’s future insurability. A child rider can be converted into a permanent life insurance policy, without requiring any medical exam or health record evaluations.
If you purchase a child rider and your child develops cancer, you can still convert the rider into a standalone permanent life insurance policy. However, there are limits as to how much standalone coverage you can convert to. Typically you can convert the rider into a policy with five times the amount of the child rider.
For example, let’s say you’re a parent of three and you purchased a $250,000 term life insurance policy with a $10,000 child rider for an extra $50 annually. This means that each of your three children are covered with $10,000 in life insurance coverage. If you wish, you can later on convert the rider and purchase standalone permanent policies up to $50,000 in coverage on one or more of your children. This policy can also later be transferred over to your child once he or she is an adult if they want to take over ownership.
Permanent Life Insurance Policies for Children
A child rider isn’t your only option for buying life insurance on your children. You can purchase a permanent life insurance policy on your minor child. You don’t need to start out with a child rider. Note: You cannot buy a term life insurance policy on a minor child.
This is a more expensive route than a simple child rider, but it allows you to start accumulating cash value sooner, you’re able to buy higher amounts of coverage, and it doesn’t expire like a rider does.
The cash value that accrues inside the policy is tax-deferred, meaning you won’t pay taxes on what accumulates as it sits untouched. A policyowner can withdraw from the cash value or borrow against it. Once your child is a healthy adult, one option would be to surrender the policy for this built up cash value.
» Learn more: Buying Life Insurance on Your Children
If you transfer ownership to your adult child, they would then takeover the premium payments and have control over it. They could keep it active or choose to surrender it for the cash value. Many adult children will do this and then put this amount toward a new term life insurance policy, which is very affordable. However, if your child had cancer growing up, they should not surrender the permanent policy until they know they can be insured for a new life insurance policy.
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Buying Life Insurance After a Childhood Cancer Diagnosis
If your child was diagnosed with cancer, you will not be able to buy a standalone life insurance policy until treatment is complete and the cancer is in remission. The number of years that need to pass after treatment before getting coverage vary depending on the type of cancer and the type of insurer. For example, with acute lymphoblastic leukemia, many insurance companies won’t offer coverage until at least 10 years have passed since treatment completion.
With a history of pediatric cancer, life insurance underwriters will want to know the following:
- The location of cancer and the exact type
- What was the grade of the cancer
- What stage was it
- Dates of diagnosis and last treatment
- How the cancer was treated and the medications prescribed
- Doctor’s name and contact information
Buying coverage via a child rider, however, is a possibility even if your child is still going through treatment. Most insurance companies require a completed medical questionnaire when applying for a child rider, but not all do. For parents with children who have cancer, this child rider can be extremely beneficial. Be sure to ask your Quotacy agent about this rider if you have a child with adverse medical history.
Children who beat cancer and keep it in remission can still have trouble getting approved for life insurance coverage as an adult. A child rider can ensure that not only will the child have coverage while going through cancer treatments, but the rider can be converted into that standalone permanent policy later in life.
Because insurance companies evaluate pre-existing conditions differently from one another, applying for life insurance through a broker, like Quotacy, who advocates on your behalf is your best bet.
When you (or your adult child) apply through Quotacy online, your dedicated agent will review your application before it gets sent to the life insurance company. They will double-check that the life insurance company you chose through the online process is the one that treats history of cancer favorably. If there is a company out there that will be better for your particular situation, they’ll reach out with options.
Life insurance is an important purchase and Quotacy will help you obtain coverage at the best price possible.
About the writer
Natasha Cornelius, CLU
Senior Editor and Life Insurance Expert
Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.