Should You Buy Life Insurance for Your Children?
Life insurance is often viewed as a financial safety net for adults, but many parents wonder if purchasing life insurance for their children makes sense. While it’s a sensitive topic, understanding the purpose, benefits, and considerations can help you decide if a policy for your child is right for your family.
This article explores the reasons for and against buying life insurance for children to help you make an informed choice.
Why Consider Life Insurance for Children?
1. Cover Funeral and Medical Expenses
Though rare, the unexpected can happen. A life insurance policy can help cover funeral and medical costs without adding financial strain.
2. Lock in Insurability
Buying a policy early can guarantee your child’s insurability regardless of future health issues. This can be valuable if your child develops a medical condition later in life.
3. Build Cash Value Over Time
Permanent life insurance policies for children often build cash value that can be accessed later in adulthood for expenses like education or a down payment on a home.
4. Lower Premiums
Children’s policies generally have low premiums because of their young age and good health, potentially saving money compared to purchasing coverage later.
Arguments Against Buying Life Insurance for Children
1. Financial Priorities
Many experts suggest focusing on insuring the parents or primary earners first, as their loss would have a greater financial impact.
2. Limited Immediate Need
Children typically do not have financial responsibilities or dependents, so the death benefit may not be necessary.
3. Alternative Savings Options
Parents may prefer saving for college or emergencies through other investment vehicles rather than life insurance cash value.
Types of Life Insurance for Children
-
Whole Life Insurance: Permanent coverage with cash value growth, often used to build savings over time.
-
Term Life Insurance: Provides coverage for a set period, usually less common for children.
When Buying Life Insurance for Children Makes Sense
-
You want to guarantee your child’s future insurability.
-
You’re interested in a long-term savings vehicle with tax advantages.
-
You want peace of mind covering unexpected expenses.
-
You can comfortably afford premiums without sacrificing other financial goals.
Final Thoughts
Buying life insurance for your children is a personal decision based on your family’s financial situation and goals. While it may not be necessary for everyone, it can offer unique benefits such as guaranteed insurability and cash value growth.
Before purchasing, prioritize coverage for adults in your household and consult a financial advisor to see if a children’s policy fits your overall plan.
Frequently Asked Questions
Q1: Can I convert a child’s policy to adult coverage later?
Many whole life policies allow conversion to larger coverage when the child becomes an adult.
Q2: How much coverage do children’s policies usually offer?
Typically between $10,000 and $50,000.
Q3: Are premiums for children’s life insurance expensive?
No, premiums are generally low due to the child’s age and health.
