Buying Life Insurance for Children
Most of the time, life insurance is to replace the earning power of a family breadwinner. Life insurance allows dependents to continue living comfortably in the event of a death. In almost all cases, children are the dependents, not the depended-upon. So, what is the point of life insurance for children if it isnâ€™t to replace money for the household?Â
Generally, people recommend life insurance for children for four primary reasons:
- As a savings account.
- To protect the childâ€™s later insurability.
- To pay for potential funeral expenses.
- To provide financial stability for parents in the loss of a child.
While life insurance policies for children are generally inexpensive, SelectQuote encourages parents to weigh the options.
Life Insurance for Children: Pros and Cons
- Most child life insurance policies are permanent, whole life policies, which include a savings account component (called cash value) that grows slowly over time. A whole life insurance policy can be used as a set-it-and-forget it savings account. It may make sense for your financial situation to use a child life insurance policy as a savings vehicle. Your SelectQuote licensed agent can help you determine if it makes sense for you.
- The intent for protecting your childâ€™s insurability is that if a child is protected by a life insurance policy from an early age, before diagnosis of any potential pre-existing condition, he or she will be able to increase the amount of that policy once he has dependents. Itâ€™s good to remember the chances a child will not qualify for life insurance in his or her 20s or 30s is low.
- Yes, funerals are expensive. But, thankfully, the odds of a child dying are slim.
- In the event of losing a child, parents will welcome the psychological safety net of life insurance. The policy payout will allow the parents to address losing the child without worrying about losing significant income for the family.
Life Insurance for the Whole Family
Itâ€™s a solid option to put money into a savings account to have cash on hand should you need it. Also, it is important to ensure the adults in your household have adequate life insurance coverage. When you ensure a dependentâ€™s financial security in the event of a caretakerâ€™s untimely death, you are ensuring a domino effect of good financial decisions that will last a childâ€™s lifetime.
Do you need help determining what kind of life insurance you need, or what adequate coverage is for your family? Reach out to a licensed SelectQuote agent for assistance.