In response to my life insurance post, a reader emailed to ask whether I’d recommend life insurance for children. In general, no.

When my husband was a baby, his mom bought a Gerber children’s life insurance plan to cover funeral expenses if he died. He continued to pay for this $10,000 coverage well into his late-twenties, until I pointed out that he’d probably paid more than it was worth. He was able to cash it in and get a little money, but not much.

Why Buy Life Insurance for Children?

There are two main instances when you might want to buy life insurance for your kids:

  • Your child contributes income to the family. This is a pretty rare occurrence, but it’s a possibility, especially for child actors, models, and other performers. In this case, you might consider buying insurance to replace your child’s income if you have no other sources of support and are a full-time stage parent.
  • You have a strong family history of diseases that make acquiring insurance later difficult. Examples would be Type 1 diabetes and other debilitating, lifelong illnesses. If you buy your kids whole life insurance when they’re young, you guarantee them coverage later in life, as long as you or they continue to make the payments.

Preparing for Funeral Expenses
Unless either of the above applies to you, there’s no reason to buy your child a life insurance policy. If you’re worried about funeral costs, deposit the premium amount into a college savings plan of some kind. You can still access the money if the unthinkable happens, but your child will have additional money for college if it doesn’t.

Comments

6 Responses to “Should You Buy Life Insurance for Children?”

  1. Cavalcade of Risk #45 ~ Is Love a Risk? | I've Paid For This Twice Already... on February 13th, 2008 2:43 am

    [...] Money Matters: Should You Buy Life Insurance for Children? There may be some instances where this is a good idea… decide for yourself [...]

  2. Super Saver on February 13th, 2008 7:02 am

    Aryn,

    I had always assumed there was no need to get life insurance for children. However, you post presents a good case for instances where it does make sense.

    Here via CoR.

  3. Heather on February 13th, 2008 11:19 am

    I enjoyed this post, and I know this is a controversial topic. While it certainly makes sense to insure a child with high risk factors, you never know when something can happen. I have policies on both of my children. They are small term policies that offer the opportunity for them to buy more at specific ages. My mother found out in her late teens that she had a heart “irregularity” that wasn’t serious but prevented her from getting life insurance. As a new bride I was diagnosed with a seizure disorder and fought for well over a year to get life insurance. Neither of us had family histories of these conditions. I see my kids as my babies now, but know that someday they will be providing for families of their own. With the insurance locked in and options for them to add to it later, something quirky won’t prevent them from protecting their families down the road. For us it is money well spent.

  4. Steve on February 5th, 2009 11:57 pm

    Saving only 50 dollars a month only gets you 600 dollars if something were to happen to your child by the end of the year. You say not likely but it does happen. It’s better to prepare for everything and then the savings is a bonous. Think of the value that you are passing on. Life long insurability, potential savings, and coverage for unfortunate incidents. Save 50 bucks a month and all you have is 600 every year plus minimal interest.

    3 pluses to 1. Buy insurance for your kids, it’s worth it.

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