Why Should I Buy Life Insurance on My Child?

For many adults, the need for life insurance on themselves is clear. They have a household that depends on them (and their income) in order to survive. The income that they bring into the household on a monthly basis allows the family to pay the mortgage, pay for daycare, pay the car loan, pay all other bills, save, and live the lifestyle that they are accustomed to. If an untimely death would occur, the household would cease to receive their income. The surviving family would no longer be able to live the same lifestyle; live in the same home. An untimely death would also put the burden of funeral expenses on the family that may have not been saved for. This is why many adults purchase life insurance. Life insurance isn't bought for you, but for those you would leave behind.

However, babies/children have no income to replace if anything were to happen so why buy life insurance on a child?

At Farmers Insurance - The Wertzberger Agency, we not only highly recommend life insurance for parents. We highly recommend life insurance for EACH CHILD of our clients. Why you might ask? Here are four reasons why you should purchase life insurance on your children.

Reason #1: The Coverage
As a parent, a loss of a child is devastating no matter the age of that child. If anything were to ever happen to one your children, you are going to want to spend time with your family to process and recover. Having life insurance on your children allows you the opportunity to take the necessary time to grieve and give your child the proper sendoff they would deserve. Life insurance provides you and your family peace of mind by not having to worry about income stopping during that time, it also would provide you funding for funeral services etc during that time.

Reason #2: Protecting their insure-ability
We all know that the big factors when it comes to qualifying for life insurance is our age and our medical history. If someone is overweight, a diabetic, a cancer survivor, or of just an older age, they may not be able to qualify for life insurance. When purchasing life insurance for your children, they are the healthiest they will ever be. As we age, we are more at risk for issues that would determine if we are eligible for insurance or not. Getting life insurance on a child when they are the youngest allows them to get coverage in force before the risk of any child onset illness that may effect whether they can qualify for life insurance in the future.

Reason #3: Future cash growth
Many permanent type life insurance policies have added benefits of being able to grow cash value in addition to providing needed life insurance. Over time, if funded properly, this cash value can grow to substantial levels. Even better, this cash value can be accessed without penalty (usually after a waiting period) and TAX FREE! Many parents use this benefit to help with down payments on a home for their children, assistance with purchasing a car, or simply let their children reap the benefits of the cash value continuing to grow. Many high income earners who can no longer qualify for tax beneficial savings plans (Roth IRAs), use permanent life insurance as a way of growing cash to access (tax free) in the future. With the assumption that tax rates will do nothing but increase as time goes on, this can be a method of minimizing future taxable income. This would be referred to as tax free supplemental retirement income when accessed. Getting life insurance on a child allows for a very long time period for growing the cash account for future benefit.

Reason #4: It's cheap
After hearing about all the reasons to get life insurance on children and future cash growth benefits, many parents are shocked to know exactly how inexpensive it is. Depending on the age of the child, the type of policy, and the funding intentions, a policy can be purchased for as low as $15/month.

The mindset of purchasing life insurance on a child can be a hard one for parents to put themselves in. However, after having a conversation on all the benefits of a policy, it's usually a very easy decision to make on purchasing a life policy for your child.

For more information on life insurance policies or to receive a personalized proposal, please contact Farmers Insurance - The Wertzberger Agency at 913-383-3276.