Should You Buy Life Insurance for Children?
The first thought about buying life insurance for a child is that it is exploitation. There are many creditable reasons to buy life insurance for your child or grandchild. It could very well be one of the better gifts you can give him or her.
If you choose to buy a whole life plan for your child, you will be providing him or her with a face value protection along with an investment plan called accumulated cash value. This is a policy that will be in force for his or her entire life as long as the premiums are paid. If at any time the child or now adult, should become uninsurable, he or she can be assured that he will have the policy to fall back on for life as long as the premiums continue to be paid.
You can buy a one year old child a $50,000.00 whole life policy with all of the features for approximately $300.00 per year. This is not bad when you consider that it is is a locked-in rate and it will accumulate a nice cash value over the years.
You can buy a one year old child a $50,000.00 twenty year term policy for approximately $30.00 per year. Yes, it is approximately 10% of the premium cost of whole life. The down side is that it will expire in twenty years with no cash value. The good side is that term life is very cheap and you can take the savings over the more costly premiums of whole life, and make investments for a much higher yield. After 20 years when the term has expired, you can hand over a nice stash of cash for this college-age child.
Why would a person buy either of these policies for a child? There are several reasons; reason one is that the premiums are pocket change, by comparison. Two, if the dreaded necessity for burial arose, the costs would be covered. And three, if there was a long expensive illness prior to a child’s death, there would be some help from the life insurance company to get you out of medical debt.
Life insurance companies are like other companies, there are good ones and there are bad ones. Every company and every salesman will tell you that their product is absolutely the very best. Always investigate them; check out their life insurance policy to verify that what they are offering is what you want. You may even want to contact your state’s insurance board for a list of ratings on the companies with licenses in your state. Policies will vary somewhat from company to company so you are not always dealing with apples to apples, so ask lots of questions. Since you are making this investment, you want to guarantee that your child will get the most out of the policy for which you are making this sacrifice.
