There is a serious debate underway regarding whether or not it is appropriate or necessary to buy life insurance policies for children, and if there is any benefit to the purchase.
Those who would buy life coverage for their children do so because they feel that they are helpful financial tools that play an important role as a part of a larger savings and investment portfolio.
However, others would say that for the majority of families, buying a life insurance policy for someone that young is typically wasteful, since it will rarely replace the income that was lost.
According to a Society of Actuaries consulting fellow, James Miles, it is usually not a good idea to purchase a life insurance policy for a kid.
Equally, the author of the book “Questions and Answers on Life Insurance,” Tony Steuer, made a similar assertion, saying that the “real reason for life insurance” is for “replacing somebody’s income.”
Term life insurance policies are different, as they are less expensive, but permanent life allows cash value to accumulate so that it can be used at a later date. One of the reasons that many people buy permanent life insurance for kids is to help to provide them with greater protect their insurability in the future. This is because these policies can be continued into the child’s adulthood.
At the same time, Matt Rowles, a Prudential Financial director in advanced marketing for individual life insurance does not advocate using life insurance as a way to save money for a child’s future. He stated that there are a number of far superior ways for saving money, especially if a college fund will be needed.
On the other hand, some might want to consider a child term rider on their own life insurance policy. These benefits are usually low cost and are mainly used for funeral expenses due to the benefit amounts are not that high.