Comments on: Should You Buy Life Insurance for Your Child?

By: Tim

Tim — Tue, 22 May 2012 23:21:10 +0000

In reply to Jeff Rose. My only comment would be, I like guaranteed insurability. Also, I have life insurance now. If my parents had taken out a permanent policy for me in my youth, it would have made my financial situation at this point in my life better. I would have needed to purchase less coverage and some of my coverage would have been at a fraction of the cost. My view of life insurance on kids is that it is not an investment vehicle, there are better vehicles. It is to make their life better, by both guaranteeing some form of insurance and lowering the cost of the insurance that they will need in the future. Just like a 529 plan is a gift to a child, some form of permanent life insurance can be as well. And that is not even getting into over-funding (the amount of time the policy has been in force plays a large role in this) and the possibility of avoiding taxes in the future on your gains.

By: Jeff Rose

Jeff Rose — Tue, 22 May 2012 20:07:46 +0000

In reply to Tim.

Life insurance is situational.

Couldn't agree more. For my situation, it doesn't make sense. Instead of investing into life insurance for my children, my wife and I have focused on building our savings to 18 months of our household expenses (not including our investments). If I had to bury one of my sons, I would pay everything out of pocket. For the life insurance, I have purchased a $2.5 million dollar on myself. I currently do not have any life insurance on her (she recently quit her job) but have considered getting a $250-$500k policy to help out. The purpose of any investment is to give some benefit or reassurance. If purchasing life insurance for your child gives you that, then so be it. Just make sure you're not planning on it being a huge amount that many often do.

By: Tim

Tim — Tue, 22 May 2012 19:56:33 +0000

I searched, “Why insure your children” and could find no unbiased sites. So I tried this out and was fairly disappointed. Life insurance is situational. My wife was diagnosed with a brain tumor a few months before we were married. She is now unable to purchase life insurance. Early on in our marriage she was working and we had a mortgage and some other debts. It would have been nice to have some life insurance, not knowing how long she would be here given her condition. We shopped around and received a no from everyone we looked in to. Guaranteed insurability, even a small amount, is nothing to take for granted. Also, I can think of nothing worse than having to bury my 6 month old daughter. I am also not a rich man, so I guess it could get worse because the tragedy would be compounded by a financial burden. I understand there are several insurance agents who sell products based on overzealous projections that have virtually no shot of performing as advertised. That’s a shame. But I can also think of many financial advisors, wall street bankers, and mortgage brokers who assisted in nearly collapsing our entire economy. Should I swear off all products offered by those professionals because of the mistakes of those in the past?

By: Jeff Rose

Jeff Rose — Fri, 18 May 2012 19:23:47 +0000

In reply to Michelle. @ Michelle As a father of 3 and soon to be adoptive parent, as well; I personally don't see the point. If you're spending $10/mo on a whole life policy, then it's not a big deal. In some cases I've seen licensed insurance agents selling policies to parents using the "it's an investment" sales tactic where they were spending hundreds dollars a month on insurance for their child, rather their own retirement. The other issue I see is the fear of "uninsurability". If that's the case, then how much is the face amount on the policy? Most times I see these polices the face amount is only $25-$50k. Yes, it's something; but the reality is that it's not anywhere close to being enough life insurance coverage. I am glad that the life insurance for your daughter makes sense for your financial plan. As far advice as my advice as "very misleading and very unprofessional"? It's my opinion based on several client experiences who have been dissatisfied with the life insurance that ~~they bought~~ was sold to them as a "good investment". Feel free to start your own blog and share your opinion so others may benefit from your opinion.

By: Michelle

Michelle — Fri, 18 May 2012 19:08:00 +0000

As a licensed insurance agent, and the mother of an adopted daughter, I have to tell you that to give such advice “in-general” is very misleading and very unprofessional. I have Purchased a life insurance policy for my daughter, because in her situation, we do not have a reliable family medical history, and, contrary to your statement that child life insurance is merely for “investment”, we have done so because we want to make sure that she has something in place, just in case she is diagnosed with mental illness, cancer, heart disease, or a whole other host of problems that could make her “uninsurable” as an adult, or drive the rates through the roof. It is far from being an “investment” for us.

By: Victoria

Victoria — Tue, 29 Mar 2011 02:00:19 +0000

I bought a $20,000 whole policy for my 2 yo. It’s $7 per month, less than what I pay for netflix, ballet lessons, or a trip to McDonalds. I have no idea what the return or cash value will be and I really don’t care. I hope that I pay the premiums and never have to make a claim. I don’t mean to be rude, but I think you are giving poor advice. Have you considered that life insurance for children is meant to cover funeral expenses if something horribe were to happen. Is there a more horribe situation than to have to bury your child and worry about where the money will come from. I don’t have money to set aside for that. I think most people probably don’t either. I can spare $7 a month. Belive me, I pray that its a waste of money.

By: mike

mike — Tue, 03 Aug 2010 12:50:25 +0000

I do not purchase life insurance as an investment for my child. I purchase it because I know that, if my 5-year old (an only child) were to die anytime soon, I would not be able to hold onto the well-paying job I currently have. In fact, there is little doubt in my mind that I would quit my job immediately, sell my house, and move someone in the world where I could attempt to begin the process of recovery. I would need a financial boost to simply stay afloat for a very challenging grieving period. In fact, if I didn’t have it, I believe there is a significantly greater chance that I may even end up homeless.

By: Moneyedup

Moneyedup — Mon, 26 Jul 2010 03:39:25 +0000

If you are going to buy a life insurance policy, do it as soon as possible. The younger the person, the more money you get out of it. Thinking about life insurance for your baby can be a scary thought, but in the long wrong your child will thank you for protecting them and their future family.

By: Craig/FFB

Craig/FFB — Mon, 26 Jul 2010 01:24:56 +0000

My understanding is we get insurance to cover big events that can cost us a lot or to protect against lost income. If that’s the case I don’t see children’s life insurance being one of those cases. I’m all for using the money in an investment like a 529.

Life insurance should be used to replace income. Once you start playing around with investing, life insurance becomes a different beast.

By: Malcom Waters

Malcom Waters — Fri, 23 Jul 2010 18:47:53 +0000

How do you feel about IULs as a savings vehicle for a college fund or retirement vehicle?

Malcom Waters MBA