Children and Life Insurance
Is It Necessary to Buy A Policy for a Child
The last thing any parent wants to think of is something happening to their child. However, child life insurance better to have and not need than need and not have.
When shopping around for the best possible quotes for life insurance, have you ever thought of purchasing life insurance for your child? After all, children are young, healthy and you hope and pray that they will be around to give you even more gray hairs than they've given you already. Unfortunately, things do happen and as a responsible parent you need to hope for the best and prepare for the worst. After all, that is the purpose of life insurance.
The question still remains: Should you buy life insurance for your child?
In certain situations it makes absolute sense to buy child life insurance. An example would be if your child were the major breadwinner in the family. For those parents who have given up their careers to ensure their children are big movie and/or music stars, it makes sense. The family's entire financial future is resting upon the shoulders of the child.
However, if your child is really more of an expense than an income earner (as most children are), there are other reasons for you to purchase life insurance for them. Here are a few:
- Future premium protection: Buying life insurance for your child now will help them when purchasing life insurance in the future. Certain genetic traits that run in a family may preclude the child from obtaining life insurance in later years. Purchasing a policy now, while the child is young and healthy, can protect their future by locking into a more affordable rate now.
- Whole Life insurance policies may prove to be a viable investment option. The younger the policyholder, the lower the premium. Purchasing a child life policy on a young child will allow the policy value to start growing early and potentially providing cash value to borrow against later in life.
- If, for some unforeseen reason, something does happen to your child, the immense grief is somewhat assuaged by not having to worry about where the money will come from to pay for the funeral and burial costs.
Alternatives to purchasing a separate child life policy:
- If you currently have a life insurance policy, you may purchase a Child Term Rider to extend coverage to cover your child/children. This coverage continues until the child reaches a predetermined age (usually anywhere from 21 up to age 25).
- There is also the school of thought that instead of paying premiums to an insurance company why not takes the same money and put it away in a Roth IRA or other investment option. Although that is a viable option, unexpectedly withdrawing money from certain types of accoulints may incur heavy penalties and fees.
This is a sensitive topic, but as parents, child life insurance is something to research, investigate and consider.
Visit Insurance 101 Helper for more information on life and health insurance.
