Child Life Insurance- Do You Really Need It?
Posted February 16, 2009 by Bernz
No one wants to think about the death of those close to them, especially their children. However, it is an important part of your overall financial planning to consider it. There are many insurance companies out there that tout the benefits of getting life insurance policies on your children. Many of these policies have bells and whistles that have nothing to do with actually insuring the life of the child. In many cases, these policies are not worth buying.
Most child life insurance is whole life coverage. That means that the term of the policy is indefinite. The child can take the policy with them their whole life. Whole life policies almost always include an investment component as well as an insurance component. That means that the policy builds value over time. Many insurance companies market these features as a way to save for college or other large expenses in the future. There are many better investment vehicles for these purposes, however. The premiums on whole life policies are larger than straight insurance to cover the investment piece.
Some child life insurance policies are term insurance which is nothing more than paying out a fixed amount on the death of a child. These policies have to be renewed at points in the future where the insurance coverage will be more expensive.
But do you need any life insurance coverage for your children at all? The main purpose of life insurance is to put the beneficiary back in the same financial position they would have been in if the insured had lived. So it makes sense to insure an income-earner to make sure that the family doesn’t have to decrease its financial lifestyle. A child, however, is a net expense to a family and therefore, there is no income-earning to replace. The largest financial expense of a child’s death is the funeral itself, so if that expense would be detrimental to your finances, you may wish to purchase a small term insurance policy just to cover those expenses.
Discussing the possibility of your child’s death with an insurance agent can be emotional and stressful. Unfortunately there are some insurance agents willing and able to take advantage of your love for your children and sell you far more insurance than you need. Looking at the situation objectively will save you money in the long run.
Popularity: 26% [?]
If you enjoyed this post, make sure you subscribe to my RSS feed!
Tags: child life insurance, life isnurance, term life insurance, whole life insurance
This entry was posted on Monday, February 16, 2009 at 6:24 pm and is filed under Estate Planning, Financial Education, Life Insurance, Misc. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
One Response to “Child Life Insurance- Do You Really Need It?”
Leave a Reply
Get Updates via Email
Let's Connect
-
Advertisement
-
Recent Posts
-
Recent Comments
- buy generic pills online on Surety Bonds for the Entrepreneur
- online pharmacy without prescription on Surety Bonds for the Entrepreneur
- Ned Carey on Getting the Most from Your Accountant
- Tips for Saving for Retirement at a Late Age | Financial News on Are you a late saver? Try these 4 tips to rev up your retirement fund
- AV Homes on Real Estate Investing for Newbies
February 27th, 2009 at 12:31 pm
This is a very good post. I’m not a big fan of life insurance for children. As a life insurance agent, the only time I would recommend life insurance for a child would be to provide the funds for burial arrangements if there are no savings to cover this unlikely event.