Do Your Children Need Life Insurance?

If you have a child, you’ll find that you soon start getting packages in the mail offering to sell you all sorts of items, from bronzed baby shoes to college funds and life insurance.  While college is certainly a necessary expense, most parents are unsure when it comes to life insurance.  Does your child really need a life insurance policy?  Let’s take a deeper look at this.


One thing to note is that no parent ever wants to dream of losing a child.  It is one of the worst things that parents could ever fathom, and the notion of a life insurance policy can force you to think too hard about something terrible – which is why most parents don’t buy life insurance policies for their children. 


But as adults, we are told how crucial it is that every parent in the household has a policy.  Is the same true for our kids?  Not exactly.  The idea of life insurance is to replace lost income and cover expenses if tragedy should occur.  Ideally, a life insurance policy is needed only for people who bring significant income to the family.  If the covered party doesn’t make much money, the envisioned large lump sum supposedly paid out in the event of death rarely if ever materializes.


Another thing to consider is that most life insurance policies for children expire when they turn 18, 21, or 25.  This means that the chances are good that you are buying a policy that you will never use.  While you certainly don’t ever want this policy to have to come into effect, it means that they are almost always a poor way to spend money, unless your child is a high-earning child star or musical prodigy. 


Investing in a college fund is a considerably better financial move than buying a life insurance policy when it comes to investing in your children’s future.

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