Life Insurance for Kids

D.,

Our life insurance agent and our financial advisor each recommended NOT doing this. Their logic, put away the money some other way for a rainy day. This way there's not ANOTHER bill to pay, you can use the money in a family emergency if necessary and you can decide how to invest the money yourself without the fees and penalties associated with a policy.

This advice was based on the fact that we have healthy children, my husband and I are both relatively healthy (read no known risks to childhood related illnesses in our family) and we have some savings/retirement and life insurance for ourselves already.

With that said, our agents, each, separately said, listen, if there's not a risk of your child dying or concern for health issues, then IF the worse did happen, you have cash to pay for a funeral, and that's all you really need for a kid.

Since we already have life insurance for ourselves, and savings/retirement money started, both suggested following the same "payment schedule" you would if you were to buy a life insurance policy for your child. Say $20/mo. (just picking a #). Be disciplined. Every month, put that money into a savings account. Every $100 or so, move that money into a c.d. or stock. Do this for EACH CHILD.

Then, IF something happens to a child, you already have a "life insurance policy" of your own making to draw from. If you never need to touch that money, then you can eventually use it for college, weddings or a trip to the Caribbean for you and your hubby after all the girls move out!

All this, without someone else taking a cut, laying on fees, or the risk of losing your investment if there's a family emergency and you are unable to make payments into a real life insurance policy you've committed to.

BTW - my mom had one of these "policies" for each my brother and I growing up. She said it took A LOT of discipline to make the payments each month. There were some lean times were making those payments was really difficult. When we were each grown, she presented the policies to us and said, here, do what you want. If you want to cash it out, it's all yours. She also said in hindsight it probably wasn't the best way to spend their money when we were growing up.

Best of luck!

Sara

I suggest you do a lot of research on this. There are soooo many ways for you to save money for your children. Some suggestions would be to talk to a financial advisor, your homeowners agent, e.g. state farm, fidelity, etc. Just call & tell them your goal for your children, the advice is free. There are way to many scams & it would be aweful if you invested money every month that didnt show much of an increase.

we did this for both of our kids when they were born. the premiums are very low and only are paid twice a year. we did it so that if they needed to have some cash for a down payment on a house etc. this could be a help. also, the whole life insurance aspect. you don't think about your child developing some illness and becoming uninsurable, but it can happen. also, you don't think about your child dying. but it too can happen. when I was 16, my younger brother died from cancer. my parents had a life insurance policy on him. you were never planning to collect, but they did. It helped pay my way through college.

Hi D.. Purchasing life insurance for a child that has a chronic health issue can be a wonderful gift. In the past, children with health issues, such as diabetes, had great trouble purchasing their own life insurance policy when they became adults. However, a policy purchased for your child (that she can grow into) should have flexibilities that she can optimize as an adult (i.e. cash value annuities, options to purchase increased coverage, etc.) A policy of $5k to $30k will not help her much as an adult. When she is married and even becomes a Mom, she will need much greater coverage.

If you are looking to purchase a policy in case something happens to your child before she reaches adulthood (to cover funeral costs, etc.), then I tend to agree with some of the other posters -- find other investment options for your money.

I am not a financial planner, nor an insurance agent. These are just my personal opinions. Most financial planners would tell you to make sure you and your husband have adequate retirement savings and life insurance coverage before making any investments for your children.

I pay a small amount extra to add term insurance for my kids to my (free) work policy. I think they also might have a few thousand dollars of coverage in our main (not work-related) term insurance policies. It's very inexpensive. But of course term insurance has no investment value for the kids.

I don't know much about this topic (but I did help a friend study for their insurance exams once!) It doesn't seem to me like buying a child whole life policy is a bad thing, if you don't have an option to buy cheap term insurance through an employer. It is an investment, although it may not pay as well as others (except that, maybe these days it it does.)

Life Insurance is to there to cover debt, etc...in case of death. Your children don't need life insurance aside from a simple policy that would cover burial expenses. This you usually get with your own life insurance policies. They don't have debt like a morgage so they don't need the coverage. The only life insurance you should be buying is term life insurance that would be enough to cover all your debt should something happen to you or your spouse. Talk to a financial planner. I go through Primerica, but there are many good companies. Any agent that tries to sell you a "cash value" policy is a scammer and I would run the other direction. If you want to put away money for the kids, there are better ways, definitely get some professional advice. Good Luck.

Spend the money on life insurance for yourself if you do not have any.

If you die and you have life insurance, your kids will have something to help support them. If you die and they have life insurance, well they have life insurance that probably has little to no value (other than what you have paid into it) that they could borrow against, and no other insurance payout that they might need.

Hi D.
I would love the opportunity to talk with you about coverage for your child...I am a licensed financial coach and have great info to share with you. If you are familiar with Suzi Orman or Dave Ramsay, my recommendations are in alignment with their philosophies. The ad you received is NOT a good option for you. Please give me a call and I can explain why. (Too difficult to do in an email). I can be reached at ###-###-####.
Thanks
J.

Hi D.,
I'm not an insurance agent, but mine suggested buying policy's for my two kids now because of the things you mentioned. It's a nice savings plan and very affordable.

I would ask your insurance agent for some other quotes as well. But to answer your question, I think it's a good idea to get your kids life insurance policy's, as long as they are the kind that build value.