Life insurance policies for children typically are whole life insurance policies, which means they will provide lifelong coverage as long as premiums are paid. Premiums tend to be guaranteed, so they won’t increase over time. Plus, a portion of the premium goes toward investments builds cash value over the time, which can be accessed for multiple purpose like, education, marriage, or any other financial needs. Premiums can also be paid up over a shorter period of time, usually over 20yrs. Whole life can be classified as Participating Whole life Insure and Non-Participating Whole Life Insurance.
Participating life insurance provides a combination of permanent life insurance (whole life insurance) protection and an opportunity for tax-preferred cash value growth. The base insurance protection is guaranteed for life, as long as you pay the premiums on time. The policy is also eligible to receive dividend payments, which you can use to buy additional coverage or reduce your annual premium. You can also leave them on deposit to earn interest or take them in cash. Dividends are not guaranteed. take them in cash. Dividends are not guaranteed.
These plans offer more simplicity and a lower premium, but they do not generate an annual dividend. Non-participating whole life policies provide lifetime protection, fixed premiums guaranteed cash values and certain plans can be paid-up in a limited number of years.