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Should You Buy Life Insurance for Children?

5 Reasons to Consider a Life Insurance Policy for Your Kids

By

A picture of four children

Buying life insurance for children can be a good purchase for families.

Photo © coloniera2 / stock.xchng
Most parents wonder if they should buy life insurance for their children. Naysayers frown upon the idea because life insurance's initial purpose was to cover the loss of income from a working adult. However, there are many reasons why parents should consider buying life insurance for their children.

1. They'll Always Be Insured

One of the primary benefits of having a life insurance policy for children is that they will always be covered regardless of their future health. Verify with any life insurance company that the policy you will be buying states that your child will never be denied life insurance no matter what medical problems he faces throughout his life. Get it in writing.

There are a number of factors that can affect your children's future insurability. High blood pressure, diabetes, obesity and cancer are just a few of the many health complications that can prevent your child from being insured down the road. With a policy that guarantees he will always be insured, he'll be covered when he's 70, regardless of his health.

2. You Get Peace of Mind

Every parent plans to outlive their children. If the unthinkable happened to your child, you would have one less thing to worry about during such a difficult time with a life insurance policy for him. That policy would cover the expenses of a funeral, which could run into the thousands.

Life insurance for children can bring you the peace of mind you need. A life insurance policy valued at $10,000 to $15,000 would more than cover funeral costs should tragedy strike.

3. The Policy Can Build a Cash Value

A whole life insurance poli­cy for children can earn cash value. By the time your kids are 18, that cash value has built itself into a little nest egg. Your child can use the money to buy a car or borrow off of the policy to help pay for college.

If you opt for a whole life insurance policy for your children, ask if there are penalties for early withdrawals before a certain age. Building cash value shouldn't be the main reason you buy a life insurance policy for your children, but the right policy can include a financial perk.

4. Small Policies are Affordable

Because you will be buying life insurance for a child, you won't require a million dollar policy. Anywhere from $5,000 to $15,000 is a good starting point for a children's life insurance policy.

With such low policy amounts, the costs are relatively inexpensive. You can typically find these policies for $5 to $15 a month.

5. The Rate is Locked In

Buying life insurance for children now will lock in that rate for the life of the policy. The premium will never change no matter how long your child has the policy. In 20 years, his $15,000 policy you paid $10 a month for will still cost the same.

Always investigate the life insurance policy to verify what you want out of the policy is true for the company where you wish to insure your child. Policies vary greatly from company to company so you want to ask lots of questions, not just for now but to guarantee your child will get the most out of his policy even when he has a family of his own.

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