In the world of life insurance, often times we need to talk about those unpleasant what-ifs. It is even more taboo when we talk about the idea of placing life insurance on a young child. Yes, the policy would provide a payment to beneficiary(s) in the event of the child’s death, but when it comes to children’s life insurance, there are many other really good reasons to consider this a wise purchase. I personally have purchased life insurance for both of my children, as I try to provide the best future for them that I can. Allow me to elaborate.
-Young age = low premium. As you might imagine, buying life insurance on a 2-year old is significantly less costly than say, a 35-year-old.
-Protect their insurability. Later in life, they may attempt to buy life insurance, perhaps when they have kids of their own, but at that point they have a health history that makes them ineligible to qualify for a policy. If you purchase a life policy before those potential health challenges come up, you have avoided a problem, and they will thank you later!
-Build cash value. In most instances, if a life policy is “whole life,” it will build cash value. As the years go by, and as you pay the premium, it almost acts like a savings account; building a pot that they can access later in life. At some point, the cash value in the life policy actually exceeds what has been paid in for premium.
-Potential multi-policy discounts. Some companies that offer home and auto insurance will offer children’s life policies. In that case, if you take advantage of the life policy, you may be eligible for additional savings on your home and auto policies. Talk about a win-win!
At the end of the day, yes, this is life insurance. If the unthinkable happens, a death benefit will be paid out. But the list of positives outside of the death benefit really makes this a great option for any parent/grandparent of a child to consider as an important piece in planning for the future of the child.