Life Insurance on Children? No Way!

Posted by Madison on November 28, 2007

We recently ordered the pictures taken at the hospital for our newborn. While ordering I was thrown a sales pitch on buying life insurance for my child. Last time I checked life insurance was to replace lost income. My children, while I love them dearly, are not really contributing to the bottom line of our family books.Let’s take a look at some of the myths people use to justify buying life insurance on children.

Myth: You will need it to pay for burial expenses.

Burial expenses are a one time cost. While the cost is high, it is still less than a year of our child care expenses, and significantly less than what we will spend over a lifetime raising our children.

Myth: It’s cheaper to buy now than later.

Buying something that I don’t need when it is cheaper does not make it a good deal. It’s the same as buying olives on sale. I still won’t eat them.

Myth: It’s a good way to save for children.

If they mean disciplined, maybe. But I assume that good means getting a reasonable return on the investment. While whole life policies do include a cash value portion, it would be much better to discipline yourself and invest the money elsewhere, in a high yield savings account for example.

Myth: In case they become uninsurable later.

Isn’t this a double negative? Insuring against becoming uninsurable. This argument probably holds the most weight, but again, unless they are contributing to our family dollars, there is no income to replace currently. When they do get a job and need to be able to replace their lost income, there are still other avenues available such as group coverage through an employer. For adults, see How Much Life Insurance Do You Need? 

Final words
Of course there are always exceptions to the rule. For example, if your family does not have an emergency fund, and a burial would put you into debt, it may be worth considering. However, for the majority of families I find it as an unnecessary expense. Taking the money spent and investing it in their education is a better route to go.

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Comments to Life Insurance on Children? No Way!

  1. I don’t know were you got the idea that most families could afford memorial costs…. have you not looked around lately??? People are living pay-check to pay check …

    Your right a memorial for you child would not cost more then a year worth of childcare … but I would love for you to point out an average American family that could afford a years worth of childcare at one time.

    Some people do have rainy day funds but how long does that last??? And what happens if one parent can’t take it and needs to take several months off of work??? then what?

    Not being insurable later in life is something for a responsible parent to think about… just because your child doesn’t contribute to your household doesn’t mean he/she won’t have one of their own to contribute to later in life.

    I personally have seen a lot of families who have lost children. You obviously have not and for that you should be thankfull…

    Children die everyday… don’t you think that having a life insurance plan would help these families??? Everybody loves to think that nothing bad will ever happen to their children so they don’t need to worry …. but what if it does? Reality is for some of you it will.


  2. I agree mostly with Melissa. Imagine the heartache of having to spend a year’s childcare expenses on your child’s funeral. True, life insurance replaces lost income, but this is not the sole reason for life insurance. I personally know people who had to second mortgage their house to pay for their child’s funeral. I am a little biased, as I work for an insurance company, but I have also seen first hand how purchasing life insurance on children has been a good thing.

    Whether or not you choose to purchase life insurance on your child is a personal choice. There are other options – a child rider on the parent’s policy, for example. At least there would be a little coverage if something happened to the child to pay for funeral/last expenses, perhaps provide for some grieving time, and the rider could be converted if your child did end up uninsurable as an adult.

    On a much more personal note, my sister died at the age of 20, and it took my mother almost a year to feel good enough to go back to work. If it had not been for life insurance, she would not have been able to take time off work to grieve. If something happened to either of my children, whom I care about more than anything in this world, I would want the same option.


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