Is Life Insurance For Children Really Necessary?

Some parents may feel coerced into getting a life insurance policy for their children by shrewd insurance salesmen.  Others may feel obligated to do so when they get one for themselves.  But, the question – life insurance for children: is it a need? – will depend on the financial circumstances of the parents and what benefits the child will accrue by having an insurance policy in his or her name.  Just like an adult insurance policy, there are two main types of life insurance policies that can be taken for children:
1. Whole life insurance
2. Term life insurance.

A children’s life insurance policy can be taken for a child who has a genetic medical condition be able to have insurance when he or she is older.  Most insurance companies will try and sell insurance policies to parents claiming that a child’s life insurance policy is a must.  Actually, this really depends on the type of policy, so do not get pressurized into getting one for the sake of doing so.  The main reason why parents must consider getting a life insurance policy is if there will be future insurability problems. 

This will result in the case of a family history of medical conditions like heart disease or diabetes, which a child can inherit. In such a case, getting life insurance policy when they are earning could be a problem or work out too expensive.  On the other hand, if a parent has already taken an insurance policy for such a child, then continuing it in adulthood will be easier.  In such cases, the cheapest form of insurance will be a twenty year term life insurance with the option of renewing it to a whole life policy at the end of the term.

Parents find it very difficult to use a benchmark to calculate how much the amount of money their child will need by way of insurance. For such parents, their salary level can be taken as benchmark. If the parents want their child to continue with the policy even after 18, they should take a whole life policy rather than a term life policy as the later is neither useful nor a profitable one. It is because the term life policy will be good for nothing after its expiry particularly for the children who outlive the term life policy taken by their parents.

Term life insurance amounts can be used for outstanding medical bills or funeral expenses. Some term policies make payments to the child if he or she becomes disabled during the term. The advantage of term life is it is useful in repaying outstanding debts or for treatment expenses for parents shocked by the loss of their child but the disadvantage is it will not allow to borrow against the amount. In fact, most of the parents don’t consider the situation of losing their kids even in dreams. Hence they don’t fee like taking term life policy.

Whole life policy is very much useful for those whose family is having genetic disorders. For the children with precarious medical condition that could manifest in the later stage of their life, whole life policy is an ideal choice. The money that comes from can be used for medical expenses and it also allows the parents to borrow against insurance which can be used for short term expenses life school fees. Most of the children will be the beneficiaries on their parent’s insurance policies. Hence most of the financial experts believe that insurance to children is not necessary.

In fact, instead of paying premiums on insurance policies, the amount can be used to open a savings account for children, which basically amounts to the same thing. This money can be then used for a child’s college expenses, medical expenses and such. With medical science improving in leaps and bounds, most people remain insurable well past the age of 80.  The chance that a child will become uninsurable is relatively small, so parents need not really worry about taking life insurance for them.

Investing in mutual funds or annuities is also a better idea. Parents can comfortably spend the money they earn from these for their kid’s future educational and other needs. Financial experts do suggest that doing some thing just for the sake of doing it is not good. One has to consider one’s family conditions before taking any decision especially in the case of insurance.



Article by David Livingston of EQuote. For more information on term life insurance for seniors and term life insurance, visit his site today. 

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