Life Insurance for Your Kids?

If you talk to a financial expert they will tell you no. I disagree unless you have a substantial amount of savings in case of an emergency.

I had a discussion with a financial advisor, and this is what I said "I know that the chances of a child passing away are very slim, however, in the extreme rare event that it happens, I will not have the funds available to cover the cost of a funeral. The cost is very low, it's not like I can't aford $3 a month and if I were to save that $3 a month, it wouldn't earn any interest." He agreed with me.

Yes.

Two reasons.
1. Getting a policy now helps guarantee that they can get some type of coverage later. Diabeties runs in the family

2. A policy will help cover expenses if God forbid something ever happen to your kids. When a child dies, there are still funeral expenses, dr. bills, loss pay for grieving, etc.

I fell for an insurance agents selling me a $100,000 life policy for my son because of the diabetes. Paying $100 a month. Then I realized that was stupid. Now both of my kids have the Gerber Life GrowUp plan. $20 a month for both policies. Its $10,000 now, and when they turn 21 becomes $30,000 and can be transferred into their ownership.

M.

We have life insurance for our kiddo. When you purchase life insurance for your kids its really for your future grandkids. If your child should develop a serious condition i.e. cancer it will be really hard or very expensive for them to get it on their own once they become adults.

Yes absolutley.
1st reason is if something tragic were to happen, God Forbid, you dont want to have to go right back to work. You dont want to have to take up a collection for final expenses or deplete savings. You would need time to heal and not have money pressure on top of a tragedy.
2nd reason is to give to them as a gift when they grow up. They would have the option to take out cash value to help pay for college or downpayment to buy a 1st home.
3rd reason, it will never be any cheaper than it is right now. Life insurance is based on your age, so, when kids are young it is super cheap and just gets more expensive as they get older if you dont lock it in.
4th reason is to preserve insurability. If, God Forbid, your child becomes ill, or even just develops asthma, they would be instantly unisurable for the the rest of thier life. If you get them a policy you lock in thier insurability for the future. They can usually increase the coverage you buy them at certain intervals.
If you have life insurance for yourself, you can sometimes add a term rider that will cover your kids for next to nothing until they turn 21.

I know what the Ramsey says - his life insurance rules are laughable. It is not an investment product. You don't think of insurance in terms of capital gains. He has no business giving life insurance advice. No other way can you put $20 down today and if you died tonight, your family would get a check for hundreds of thousands of dollars.

There are a lot of things to consider when taking out life insurance for a child. I am thinking a whole life policy. If you take out the policy on a child, you are paying a premium for a child, usually very small. If the child becomes sick, cancer for example he (she) has life insurance, and may not qualify later in life. The policy builds cash value and in later years you or the child can take out a loan on those cash values. You can usually build the policy to a bigger benefit from a $5000 policy to $10,000 to $20,000 as the child matures. My brother died 16 yrs ago and his funeral was over $5000. There is no tax on a life insurance benefit and most companies pay out within 10 days if receiving a death certificate. Take a look at the premium cost on say a 5 yr old and a 25 yr old for the same amount of insurance. It's up to you and I know many finanicial planners say it's a waste of money, personally I don't think so.

A complete waste of money. Insurance agents prey on the fact that people will be concerned that their children might die and they might not have enough $$ to provide for funeral expenses and also on the idea that their children may not be able to get life insurance one day.

Everyone should have an "emergency" savings of 6-12 months worth of your expenses. If you have that, then you ought to be able to (financially) cover an unexpected funeral if the worst case scenario should occur.

Instead of life insurance for your kids, I would consider setting up a savings instrument for them. These days, very little interest is paid in traditional savings accounts, so maybe consider other savings instruments. Also, I see that you are in Virginia. Have you set up a 529 plan yet? If not, that is a great use of the money you might have spent on life insurance.

BTW, I am a financial advisor - but can't get more detailed in recommendations without having full knowledge of your financial situation. I would be happy to answer any additional questions.

Cheers,
C.

The basic idea behind life insurance is to replace an income IF a spouse dies. Kids have no income therefore they do not need life insurance. People would be wiser to put that money into a college fund. It's an emotional sell--parents see that and think "Oh. To be a good parent, I should get him/her life insurance." It's easy pickings because new parents (rightly so) cannot imagine a more horrendous occurrence than the death of a child. Generally speaking, it's never a wise financial move to buy life insurance for a child.

That Gerber life insurance policy will only be "worth" 20,000 IF the child dies (sorry, God forbid) If he cashes it out at 18, he'll get a few hundred buck, if he's lucky! Books for a PT college semester maybe.

No, we're well insured and it never crossed our minds to get policies for our kids. The goal with life insurance is to help the surviving spouse get by for a while without the additional income and to cover things like funeral expenses. I'm not sure why it would be needed for children.

We have a funeral rider on our insurance in case of death. It is. 29 cents a month with insurance.

People have strong opinions on both sides of this. My 3 kids all have life insurance, part of what I pay is a savings plan for them, which they can use for their education. I have to ditto exactly what Tracy K said... if something ever happened to one of my children, I would not be able to work again right away but bills still need to be paid. We have enough in savings for a funeral, but it would give me time and time is priceless. I think it is worth the money for many reasons.

We have life insurance on both our kids. I pay $2.00 per month for a $10,000 policy. It seems like a very small expense vs. facing the possibility of having to cover the cost of a funeral. It may seem morbid but everyday there is a news story about a healthy child who dies suddenly. I do not know the financial benefits of a savings plan style insurance plan like Gerber, but a small one to cover funeral expenses seems responsible.

My mom just opened up a life insurance type account through Gerber for my son. It seems to me more like a savings account though. She pays $20/month (I think if I remember right) and when he turns 18 it will be worth $20,000. He can either use that money for college or take out a little at a time as he wishes as if it were a savings account. If you're thinking about life insurance for your child, look at Gerber's website. They have a few different plans that are really great.

Why do you need life insurance for your children? I can understand spouses having life insurance because they are financially dependent on each other. If my husband were to pass away tomorrow, I need to know that we'd still have a house over our heads and there was a way to support me and my children without his steady paycheck. And if I were to pass away tomorrow, even though I am a SAHM, my husband would need to figure out the childcare issue in my absence, which maybe hiring a babysitter. But most parents are not financially dependent upon their children.

Life insurance is also there to pay outstanding debts of the person after they have passed. How many children have debts?

Not only that, but if your child is pretty healthy, chances are that you will be making those monthly payments with no chance of collecting until the "child" becomes a senior citizen and dies from natural causes. You'd be throwing your money away.

That's just how I see it.

I have had life insurance on my kids since I got life insurance for myself. It started when I was pregnant with my unborn child as a rider. Then I purchased him his own whole life policy once he was born (rates at such a young age are good)...got the max that you can get without a big physical, etc. When my daughter was born, I did the same for her. If something were to happen to either one sure it would help us with the expenses but hopefully nothing happens to my babies (one is 19 and the other 4) and it is something they will already have in place at a much better rate than they can get as an adult. Then, if something happens to one of them it will help their family (my gift to them).

No, we feel like life insurance, especially the whole life ones, are a gimmick.

We don't carry life insurance on ourselves. However, if we weren't in the position we are in we might consider it.

I don't see a reason for life insurance for a child unless it simply a burial policy.

We do carry disability, and are heavy on catastrophic illness/accident. We have plans in place if and when a funeral is necessary.

Life insurance is so that if a person dies, their dependents can be taken care of. Kids don't have dependents, hence they do not need life insurance. Before DH and I had a child, we did not carry life insurance. Neither one of us would have been financially worse off if one died so no need. Now we have a policy that pays a little if one of us dies but primarily pays if we both die (either together or pays when the second one dies if we die before DS). We will likely drop the policy when DS is an adult.

As many others have said, life insurance is primarily to ensure that the life of your survivors will be as financially unaffected as possible if you pass away and you are their primary means of support. Since most young children do not support their parents or siblings, the only real reason to insure them is to guarantee they don't become uninsurable later in life. I have the Gerber Grow up on my son that I took out when he was a baby. I did it for just this purpose, and not to build cash value, although there is some available. It is a personal decision, but in the midst of grief should your child pass on, do you really want to also worry about how to pay those final expenses? I know I don't.

We had a small rider for the kids on our policy - only $7,000. Unfortunately we had to use it for the youngest. It covered everything except for part of the footstone. However, we already had plots and vaults for us, and because she was under age 21, the cemetery gave us our plot and vault. If we would have needed to pay for a plot and a vault (required in VA) we would have had to add to what the insurance paid. Funerals are expensive. We would have been strapped to pay for it otherwise. The policy didn't cost that much.

That said, we have purchased insurance for our grandkids as soon as they were eligible, i.e., 2 weeks old. We'll pay for it until they're 21. At that point it doubles with no increase. Then they can take over.

A small policy, enough to cover funeral expenses, is a good investment and very responsible. Talk to your insurance agent because most policies would have your child then guarantee to not be turned down for policies as adults if they develop medical conditions. Its something you could even gift to your child and thier spouse when they get married.

Its super cheap too! I have life insurance through work equal to my pay annually. It is only $2/month to buy my son a policy and $9/month for my husband.

I have $25K on each of them with a DRIP on it - so eventually, it will be paying for itself and they will have something to borrow against when they are older.

I have it because GOD FORBID anything happens to them - we can take care of expenses and such.

NEVER take out any whole life policies!!! The only reason to have life insurance on your kids is to insure they can have life insurance if they develop an illness that insurance companies don't want to insure. So if you can afford it then yes get it.

And I have no idea why someone said that Dave Ramseys advice is that life insurance is for the purpose of investments and capital gains; that is absolutely not true. It sounds like this person took bits & pieces & pieced stuff together. No were in his class, books, radio show, cd's does he give such ludicrous advice. The only things he says to stay away from is whole life policies, accidental death riders, cancer riders. His entire class on insurance is very good, & I used to sell these types of policies & agree with him, they are a waste. My State Farm agent & Financial adviser say the same thing.

My husbands grandfather just passed. He had a whole life policy that he paid $50,000 into for many years and the cash benefit was only $10,000.

We have the "family/dependents" rider added onto the life ins. policy my husband has through his employment. (We have separate additional policies on him and myself also). It provides a small benefit ($5,000 I think) for myself and each of the kids. I think it comes out to maybe $20 annually. We would not take out any additional policies on the kids, because they have no special health risks (they are normal kids who are unlikely to become dependent adults unable to get coverage for themselves later), and they don't provide income to our household. The benefit of this policy is strictly peace of mind that we wouldn't be doing a balancing act trying to pay for a funeral should something happen, and maybe offset some of the medical expenses that would presumably be associated with a sudden traumatic death.

We have a rider on my husbands policy for our children for 20K. God forbid anything should ever happen, at least we have a small amount of coverage to help with any expenses. I think it literally cost about $2.00 a year to add it on.

We have it on our daughter, mainly because the cost was so little just to add her to ours. It's funny but I never really thought about it as if the worst were to happen to her what would we do, but as if the worst were to happen to ALL of us what would my family do?

I have it for my son. Shortly after he was born, my husband and I got life insurance for the whole family. Its doesn't cost much and now we have it, heaven forbid we ever need it.

I have a small policy from work. It's $10K per child and I pay one tiny premium (it's under $1.00 per month). I think it's worth it to have a small term policy of $10K to cover funeral expenses and extra time off from work so that you don't worry about paying bills and can grieve if you're not ready to return to work immediately.

I think that sometimes it makes sense to insure children with chronic medical conditions that might make it harder for them to get insurance when they are older and have dependents, but those cases are very few and far between.

Whole Life plans like Gerber are not a good investment at all. Please, if you were sold one of those plans, see a financial adviser and get the real deal. It's not magic to pay $240 per year and realize a $20K value X number of years down the road. It's a terrible investment (you would do much better in a mutual fund or even a very conservative investment) and in order to get the final payout, you have to pay taxes year in and year out. If you have the taxes paid from the plan, you get much less in the end. Please - life insurance should not be a savings vehicle for a child. If you want to save for college, do it in a tax-advantaged college savings plan such as a 529. And please don't fall for the "uninsurable at a later age" scare tactic. There are very, very few conditions that would render someone unable to obtain insurance as an adult. Asthma, for example, certainly isn't one of them. Type I diabetes would make a premium as an adult cost more, but it wouldn't render someone un-insurable in and of itself. Even childhood cancer wouldn't make it impossible to get coverage.

My husband is a financial planner and we got some life insurance for our kids. Not a ton of coverage, but we wanted them to at least be able to have something should they become "uninsurable." They have the option of adding more coverage when they get older. If they don't want more, that's fine - it will be a gift to them from us. We stop paying for it when they're 25 (I think).

Honestly, I think this one can go either way. But everyone who has young children/a mortgage/a dependent spouse or parent MUST have adequate life insurance for themselves. To do otherwise is irresponsible.