Life Insurance for Children: Five Reasons Why

Some parents view taking out a whole life insurance policy on their child as an uncomfortable thing because they don’t want to think about the death of their child. But there are many other reasons why having life insurance on your child is a good thing for them and you:

The cash value of whole life insurance can be used for education funding and as a source of additional money for a down payment on your child’s first home. In these instances, both the premium and the accumulation are not taxed by the IRS and no penalties from the insurer apply when used for either of these two specific things.

Insuring your child before they have health issues later in life helps to guarantee they have life insurance coverage in adulthood. Everyone assumes their child will have a healthy life, but some health problems are uninsurable by many insurance companies. A health condition doesn’t always mean a decline, but if still insurable it usually means an escalated monthly premium and a reduced death benefit from the original insurance application amount.

In the event of a child’s death, parents need time off from work for emotional recovery and may have outstanding debt from the child’s death or events leading up to it. Having a life insurance policy to help provide for funeral expenses, lost wages, and other financial strains will make the economic recovery shorter.

Your child’s life insurance policy may provide for policy increases, allowing your child (as an adult) to get more insurance without going through underwriting again. Check with your insurance professional to see what policies allow this before purchasing life insurance on your child.

The death benefit of the whole life insurance policy will increase along with the cash value, making some ‘child policies’ even more beneficial when they become an adult and need death protection for their own family.

If you have questions on purchasing a whole life insurance policy on your child, please contact me to discuss the features you’re looking for in a life insurance policy. Like any life insurance, the younger the child is when becoming insured, the lower the premium and the higher the cash accumulation and death benefit as they mature.

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