Children’s Life Insurance
There are ambiguous debates whether it is useful or advised for one to insure his/her children. Even different financial advisors say different things on this subject. Moreover, there are those “emotional extortionists” who say one is heartless if he/she does not pay for his/her child’s insurance. In order to see this subject in its right light, and to think along the right lines, one needs some kind of reconsideration regarding this issue.
First of all, regular life insurance’s primary reason is to secure the beneficiary financially. Generally speaking, the insured’s dependents are insured in case the insured dies. However, this is not the case with children. Talking about this latter category one cannot think of dependents needing financial support in case the insured child dies.
From this point of view, children’s life insurance simply does not make any sense. However, there is a huge list that contains the pro-arguments for this policy.
In this human world, everything carries a possible risk of being lost in a certain (close or distant) future moment. So risks against which children’s life insurance products are designed definitely exist. However, people generally are not able to insure themselves against every possible future loss. It may seem heartless, but the risk’s degree must be analyzed before actually paying for any insurance. Costs must also be taken into consideration correlated to risks and the insurance provided.
If one thinks about parents purchasing life insurance for themselves, this obviously makes sense. It is because they must ensure their children are safe at least financially, in case some unexpected tragic event happens. As children depend financially on their parents, purchasing a life insurance for parents seems to be crucial.
However, paying for such insurance that one does not need, or that is not strictly necessary might be a mistake. This might mean that parents spend a lot of money in vain, instead of using those misspent resources to their families’ benefit. So one must always make careful calculations regarding the existence of more productive spending (such as a savings account or some kind of investment) than the purchase of life insurance.
Although the above-mentioned negative points of children’s life insurance, there is still an option that needs to be taken into account. This refers to such a child's life insurance that has a savings account, namely to such a policy that matures after a certain period of time. In this case, the money paid for the insurance in form of regular premiums will be gathered together, and after a certain period of time, the insured child gets a huge amount of money due to the insurance. In this case, a children’s life insurance is the best present parents can give to their children. However, other savings instruments such as “the 529 plans” should also be considered, or at least, they are worth a comparison.
Another common reason for people choosing to purchase children’s life insurance is the fact that a child can be inflicted by a serious illness in the future, thus making it impossible for him/her to get life insurance. However, one is only recommended to initiate a policy for his/her child if there is evidence in the family’s history of serious health problems. The future insurability of a person coming from such a family may be avoided by buying life insurance for children at an early age. It is also useful to know that life insurance rates become higher with age, so purchasing child-life insurance can result in affordable rates for the whole period of the policy as premiums do not rise with time.
All in all, in order to decide whether it is worth purchasing children’s life insurance, one needs to study carefully the insurance’s terms and conditions. These depend on the purchased insurance’s role as well as type. If there are better options from a financial point of view (namely, if a certain investment seems to be more advantageous) than children’s life insurance, parents are not recommended to purchase this product. However, if the analysis of children’s life insurance shows that such a policy secures a child’s future, then the opportunity of a child’s strong foundation must not be missed out.