Should You Buy Life Insurance Coverage for Your Children?

To answer the question, "Should you buy life insurance coverage for your children?", most parents would probably answer "No." According to the American Council of Life Insurers, only approximately fifteen percent of minors have life insurance policies.

Purchasing coverage for your minor children is something that most parents don't think about. Because, the main purpose of life insurance is for burial expenses and to replace lost wages. Since most children don't contribute to the family's finances, lost wages isn't normally an issue.
(Unless your son or daughter is a child actor, for example, and kicks in to the family bank.)

However, the experts who believe you should buy life insurance coverage for your children point out two important reasons why:

1. Buy modest life insurance policies for your children at an early age and that will ensure they have it, even if they become ill- or have a hard time getting life insurance coverage for other reasons- later in life. This reason can be especially important if your family has a history of serious diseases.

On the other hand, the experts who are against the idea of purchasing life insurance coverage for young people have a rebuttal. They say the chances of your children having difficulty obtaining life insurance after they're grown is minimal.

As for covering burial expenses for minor children, the accumulated cost of the insurance premiums can exceed that cost.

2. Buy a "permanent" policy instead of a lower-priced "term" life insurance plan, and your child will be able to use the policy as collateral for money loans. This can pay for college tuition or other necessities s/he will face later in life.

The rebuttal: Permanent life insurance has considerably higher premiums than term life insurance. It would be wiser to take the amount of money parents would pay for the insurance and invest it instead. The return would be higher.

So, should you buy life insurance for your children? There are pros and cons to both sides of this question. However, parents have to decide the answer for themselves, based on their personal situations.

If you do decide to buy life insurance coverage for your children, start the policy when they are very young. That way the rates will be cheaper and easier to afford.

Shop around and find the best policy available. Most life insurance coverage for children are "term" policies which mean they expire in a certain number of years. Look for a policy that can be switched over to a "permanent" policy once it expires. Permanent life insurance coverage offers more benefits than a term policy does.