Life insurance for children is often geared towards parents. This type of insurance is a way to save money for their kids and to protect them. While some may say that it’s a smart move, some things should come first. These include emergency savings fund, your life and disability insurance, and your retirement savings. But if you’ve got all that figured out already, the question remains… Should I get life insurance for my child? To help you with this decision, here are some pros and cons.
It acts as like a savings account that your child can tap later.
Pros: The savings on a permanent life insurance policy, known as cash value, can grow tax-deferred. Thus, the policyholder can borrow against it or surrender the policy in exchange for money. It can then be used for anything like educational expenses or down payment on a car or home.
A whole life policy, on the other hand, will guarantee a percentage return. It is among the financial tools that parents should consider.
Cons: Consider the life insurance fees that can increase over time should they be invested elsewhere. Compare that to the cash value of the life policy over the same term.
It qualifies your child for more life insurance later a few years from now.
Pros: A child who experiences medical problems early may have difficulties in qualifying for coverage later in life. By getting her covered now, you will give him/her a guarantee for some coverage and can buy more in the future, regardless of the health status.
Cons: It’s actually an expensive investment for a remote risk. Young and middle adults aren’t actually having problems buying life insurance.
It can be used for funeral expenses and other costs
Pros: A child’s death is tragic. Life insurance can help minimize the burden you feel by paying for funeral expenses, medical bills, and family counseling. It also provides money for the family when the parents decide to take a leave from work.
Cons: Statistically speaking, the odds of child death are very small. Stash the money into an emergency fund, instead.
Before Buying Life Insurance For Children
Just as how important it is to buy life insurance for yourself, it’s important to take a look at your financial picture first. Get advice from a professional before buying coverage for your child. Life insurance serves a purpose. And that is to replace income and cover debts when the policyholder dies.
Roper Insurance offers life insurance products that we can tailor according to your specific needs. Our agents are willing to assist you as you decide how you can secure your family’s future. Get a quote from us! Call us at (828) 388-1851 or visit us today!