Most people do not like to think about getting life insurance for children because it is difficult to think that a child might die prematurely. In fact some financial planners think that life insurance for children is unnecessary.
Some people will add a small amount (around $5,000) to an existing adult policy in order to provide for burial but only about 15% of all persons having live insurance purchase a policy for their children.
There are several reasons why a family may consider purchasing life insurance for children especially when they are older. As an example, some policies will help to pay for college tuition. Other policies will have a savings component that children can use as they grow up or after a parent dies.
Some financial planners suggest purchase term insurance if parents want to get life insurance for children because it allows them to receive money over time. However, many say it is not something they would suggest if parents want to help children build wealth.
Other experts suggest that if the family has a history of certain health problems that can be debilitating buying life insurance for children makes sense. If the family has problems with diabetes or heart disease, this could stop a child from getting insurance later if they should inherit the disease.
Life insurance for children in this situation would mean they would already be insured should they find the disease in later life.
It is difficult to know how much life insurance for children to buy and a good rule of thumb is for the individual to take into consideration their own income. They can purchase a 20 year policy that can be converted later into a whole life or universal life policy.
When deciding on life insurance for children it may be a better idea to go to an independent insurance agent because most insurance companies do not provide life insurance for children.
Weighing options is a good idea because life insurance for children may not be as good a deal for them as a 529 plan or an educational IRA. Some financial planners say that a parent should not invest in life insurance for children because it is a waste of money.
The bottom line is that when you are making decisions about the best way to help your children grow it is better to weigh all the options before you purchase life insurance for children.