Top 5 Reasons to Buy Life Insurance for Your Children

A picture of a mom holding a life insurance policy with her child

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Most parents wonder if they should buy life insurance for their children. Naysayers frown upon the idea because life insurance's initial purpose was to cover the loss of income from a working adult. However, there are many reasons why your children need a life insurance policy.

1. Your Children Will Always Be Insured

One of the primary benefits of having a life insurance policy for children is that they will always be covered regardless of their future health. Verify with any life insurance company that the policy type you will be buying states that your child will never be denied life insurance no matter what medical problems they face throughout their life. Get it in writing.

There are a number of factors that can affect your children's future insurability. High blood pressure, diabetes, obesity, and cancer are just a few of the many health complications that can prevent your child from being insured down the road. With a policy that guarantees they will always be insured, they'll be covered when they're 70, regardless of their health.

2. You Get Peace of Mind

Every parent plans to outlive their children. If the unthinkable happened to your child, you would have one less thing to worry about during such a difficult time with a life insurance policy for them. That policy would cover the expenses of a funeral, which could run into the thousands if you had to pay for these costs on your own.

Life insurance for children can bring you the peace of mind you need. A life insurance policy valued at $10,000 to $15,000 would more than cover funeral costs should tragedy strike.

3. The Policy Can Build a Cash Value

A whole life insurance poli­cy for children can earn cash value. By the time your kids are 18, that cash value has built itself into a little nest egg. Your child can use the money to buy a car or borrow off of the policy to help pay for college.

If you opt for a whole life insurance policy for your children, ask if there are penalties for early withdrawals before a certain age. Building cash value shouldn't be the main reason you buy a life insurance policy for your children, but the right policy can include a financial perk.

4. Small Policies Are Affordable

Because you will be buying life insurance for a child, you won't require a million dollar policy. Anywhere from $5,000 to $15,000 is a good starting point for a children's life insurance policy.

With such low policy amounts, the costs are relatively inexpensive. You can typically find these policies for $5 to $15 a month. For many families, the affordable cost justifies the purchase. This is another reason stay-at-home moms should consider life insurance for themselves too.

5. The Rate Is Locked In

Buying life insurance for children now will lock in that rate for the life of the policy. The premium will never change no matter how long your child has the policy. In 20 years, their $15,000 policy you paid $10 a month for will still cost the same. This makes a life insurance policy for your children able to fit into your family's budget now and into their budget in the future. That said, the death benefit will also be fixed, and inflation could greatly diminish its value over time. Naturally, the terms of any insurance policy should be verified with the insurance company, in writing, prior to purchase.

Always investigate the life insurance policy to verify what you want out of the policy is true for the company where you wish to insure your child. Policies vary greatly from company to company so you want to ask lots of questions, not just for now but to guarantee your child will get the most out of their policy even when they have a family of their own.