Life Insurance for Your Children – A Good Idea?

Some people are superstitious about insurance. They may be afraid to buy life insurance for their children, just as some people are fearful to buy it for themselves.

Others feel sure that nothing wrong could ever happen to their children, so they avoid spending the money to insure a child’s life.

The absolute truth is that there are reasons beyond the unthinkable to ensure a child’s life. A good life insurance policy, purchased when a child is young, healthy, and far from adverse events, can pay big dividends for the child later. (And, even though we hate to think the worst, how much more awful would it be to have financial stress added to the disaster of losing a child? Peace of mind can make life as a parent much more accessible.)

Most of the many reasons to insure your child’s life are about ensuring that your child can have a long, happy, prosperous life, regardless of what they encounter in terms of illness or accident later.

Here are a few of the reasons to consider insuring your child:

  • Permanent life insurance accumulates cash value, and that value grows tax-deferred. When the child is old enough for college, the cash could help pay for it. Or, it could help the child purchase their first home. If the policy was left untouched through those life transitions, it could help fund your child’s retirement!
  • Buying whole life or universal life insurance now guarantees your children will not be without insurance later when they are more likely to need it. Later in life, if they should develop an illness or sustain serious injury, it could be cost-prohibitive, or even impossible, to obtain coverage.
  • Insuring a child’s life with whole life or universal life also means that the child’s coverage can continue regardless of military service, health conditions, or taking a college major in skydiving!

When you shop for life insurance for a child, there’s still more to consider. For instance, you can ensure the plan offers a rider to purchase additional insurance. With that option, at such specified times as marriage or the births of your grandchildren, your child may purchase additional insurance at standard rates without reapplying. Such a rider generally offers the opportunity to increase coverage on a no-questions-asked basis.

Advances in the science of statistics, too, will more firmly establish the mortality rates of various physical conditions, hobbies, and professions. Your child becoming a member of any identified groups would also result in a premium hike or the inability to purchase insurance.

When you purchase life insurance for your child, your main goal, especially if you are a young parent with limited resources, is to cover expenses you’d incur if you did lose a child to illness or accident. And that may be enough. But it’s also nice to know that coverage can do so much more to help ensure your child’s best financial future.