If you’ve ever gone looking for the cheapest life insurance rates, then you may have heard the term “why buy life insurance for a child?” The reason is that most companies don’t offer such policies. Why? Because it’s a risk to do so, since the premiums paid will almost always be far above the actual amount of life coverage you’ll need.
In my experience (and that of many other experts on the subject), the cheapest way to buy life insurance is to purchase a policy in your own name. This means that you’ll be responsible for all expenses incurred by the child (including those incurred by any dependents). You also avoid the possibility of paying tax on the amounts you pay into the policy. The result is that you’ll be able to use the interest savings to finance education or other expenses down the road.
You can, of course, choose to make your child’s death covered by your life policy. That’s another subject entirely. The point is that you can help your child have some security in his or her future. And remember, this is money that will never have to be paid back. Your child’s death won’t be a financial burden on anyone else.
Of course, not every child will need insurance. Quite a few kids are perfectly healthy, and therefore will probably do just fine without any protection. But the healthier ones will probably require some coverage. For young people in their twenties, a policy is probably a necessity. And in some cases, it might even be a good idea for older kids. Talk to an insurance advisor about the topic if you’re concerned.
Why buy life insurance for a child? And why would you even consider not doing so? To protect the most important person in your child’s life, and at the same time to ensure that your own family is provided for after he or she is gone – that’s a smart idea on numerous levels. It’s something that you’ll never regret when the day comes.
Remember that a policy will not always cover your entire child’s financial burden upon his or her passing. But it will provide a certain amount of security and peace of mind for your family, should that need ever arise. It will also provide some incentive for the child who has everything to lose. Hopefully, that won’t be the case.