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Kids & Money: Should You Get Life Insurance for Your Child?

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child life insuranceOne of the big questions that you have to ask yourself as a parent is whether or not you should get life insurance for your child. Programs like the Gerber Grow-Up Plan let you buy life insurance for your children for a small price. Then, when your child is older, he or she can keep the life insurance policy, ensuring that he or she is insured, or the policy can be cashed in to help pay for college.

Another consideration is that it is possible to purchase “regular” life insurance for your child. Some people choose to purchase whole life policies for their children. And, of course, many parents have riders attached to their own policies. These small insurance amounts are meant to help cover burial costs. Here are some things to consider as you determine whether or not to buy life insurance for your children:

Future Health Problems

Some health problems can prevent an adult from getting the life insurance coverage he or she needs at an affordable rate. The purchase of a whole life policy while your child is long can mean that he or she is already set for life insurance, and doesn’t need to worry about future health problem derailing efforts to receive affordable life insurance.

However, if you don’t have a family history of health issues like diabetes and more, it might not be worth it to insure your child young. Chances are that he or she will be able to obtain the life insurance he or she needs.

College Funding Needs

It used to be that getting life insurance for children was one way to “save” money for college. However, this is not the case so much anymore, since there are 529 plans and Coverdell ESAs to help parents save up for eventual college costs. Besides, the cash value in many of these insurance policies designed as college savings vehicles is usually so insignificant that it doesn’t make that much of a difference. You have to buy a large amount of coverage if you want to be able to effectively cash in the policy.

Instead, it might be a better idea to just find other college savings opportunities, rather than relying on an insurance policy to help pay for your child’s college.

Does Your Child Make Money?

For the most part, life insurance is actually supposed to protect families in the even that a wage earner passes on. In most families, children don’t qualify as wage earners. However, there are situations where the child does earn a living. This might be done through modeling, performing, or by some other means. In that case, life insurance for your child is a must. If your child is bringing in money, he or she should be insured so that your family is protected from a loss of income.

Riders on Your Insurance

Many parents simply find it easiest, and most cost-efficient, to add a rider to their own coverage. These riders, usually with between $1,000 and $5,000 worth of coverage, are designed to pay out if a child dies. This is money that can cover funeral expenses. That way, if your child unexpectedly passes on, you have the money available to cover some of the costs.

Whether or not you decide to insure your child is up to you. However, don’t be swayed by insurance salesmen that tell you that you will get life insurance for your child because you love them. Life insurance isn’t for the person covered, it’s for the people left behind. So, if you love your child, and care for his or her future, you’ll make sure your own coverage is adequate for the future.

(Photo: sophie.z.j)

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8 Responses to “Kids & Money: Should You Get Life Insurance for Your Child?”

  1. Shirley says:

    As each new grandchild comes along, we start a savings account for them and a life insurance policy with Globe Life.

    The life ins costs $22 per year for a $5,000 policy. That’s not much for peace of mind.

  2. sun says:

    Whole life insurance is such a scam.

    My parents took out a policy for me that earned 4.5% each year while the insurance company took 2.25% of it in commissions each year. I had cancer, went through chemo, and now I am better. Did the life insurance policy help? Not one bit. Did I need it? No. Even if I died, my parents are self-sufficient. Why do they need my death benefit? Unless you are self employed, even someone like me can find an employer with benefits that allows enrollment in a group policy. You want insurance for the things in life you can’t cover yourself — like health insurance for chemotherapy.

    Personally, I will not take a policy out on a child. I also will have enough saved up for, God forbid, any tragedies.

    • Scott says:

      Term life insurance is an even bigger scam

      • Strebkr says:

        Scott – So you are saying term is a bigger scam then whole life? At least with term you know what you are getting and what you are paying each month. I would have to disagree here.

  3. Like you said, life insurance is usually to protect against loss of income. So in most cases the answer to the title of the post is “no”. Sure, there can be cases where it is a good idea. But most of the ads you see just go after people’s sense of security, and not common sense.

  4. Sean says:

    You forgot to mention (as sun says) that this is a terrible way to save for anything, especially college. Also, what are you “insuring” exactly? You only briefly say that life insurance is to replace income, which most children don’t have. Perhaps you should take a stronger stand against this ridiculous product.

  5. Seth F. says:

    Getting any for of life insurance for a child is never a bad idea. What’s the old mantra “I’d rather have it, and not need it. Then need it , and not have it.” If you get them enrolled early in life, it can be beneficial later if they have developed health problems. Doing it now, means that he/she won’t be denied later. I think it’s a good idea, because life is crazy, and things happen that are often out of our hands.

  6. SLCCOM says:

    Life insurance for children is also needed in case of severe injury. Even if there are no illnesses in your family tree, severe injury is the most likely cause of death.

    There are insurance policies that not only cover death, but also terminal illness and disability, become an annuity and offer other benefits. Consult with a good independent insurance agent before blowing this off.

    Also, getting a whole life policy in our 20s has really saved us. Our premiums were dirt cheap compared to our premiums would be for term life insurance. Also, since we are both permanently disabled, this insurance will ensure that neither of us ends up on the street if we lose the other.

    We got disability riders, which were dirt cheap, so that becoming disabled means no more premiums. But the investment gains continue.


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