There are some pros and cons to buying life insurance for your child. Life insurance must cover something that can be insured. There must be a good reason for buying life insurance on a child. The most important thing is to make sure that the people in the household who bring in money have enough life insurance. An insurance company underwriter won't understand why people would buy a lot of life insurance on their children but little or no life insurance on the people who bring in the money. Underwriting departments for life insurance often want a certain amount of life insurance on both parents and children. After the parents are properly insured, it can be helpful to buy life insurance on the children.
Most companies have short-term riders for children that are very cheap. The child's ability to get insurance will be protected by term riders for children. When the child is 18 to 21, these term riders can be changed into permanent forms of life insurance. This is a useful feature if the child's health makes it impossible to get insurance.
Permanent Life Insurance on Children - Some parents have bought permanent life insurance policies on their children so that they can use the cash value later in life. Permanent life insurance isn't too expensive, and once the parents have taken care of their own life insurance needs, they should think about getting it for their children.
Why get a child life insurance?
- Cash Value Accumulation is when you buy permanent life insurance and pay for it with enough premiums to make money for college or other needs in the future. Universal Life policies are great for this kind of thing.
- Final Expense: This is what life insurance is mostly for.
- Protect Insurability: Getting life insurance for a child protects the child's ability to get insurance in the future.
The child will also learn about life insurance, which is a bonus. Parents who teach their kids about the benefits of life insurance help them get ready to take care of their own money in the future.
