Life insurance is typically purchased by income earners to protect their families from the premature death of the earner. So why buy life insurance for a child?
The answer is twofold: (1) the tragic death of a child can leave grieving parents with the added stress of funeral expenses, which typically run in the thousands of dollars, and (2) a child may develop an illness that prevents the affordable purchase of life insurance later in life.
That second reason can play a huge role in your child’s financial well-being as an adult. A whole life insurance policy purchased in the first years of a child’s life can provide guaranteed coverage as an adult, even if your child is discovered later to have a condition or disease. It is often possible to increase the value of the policy—say from $10,000 to $100,000—when your child becomes an adult.
Additionally, a whole life policy bought for a child is only a few dollars a month and often can be added as a rider on a parent’s life insurance policy. A whole life policy, not just a death benefit rider, can also build cash value against which your child can borrow as an adult.
With affordable payments, guaranteed coverage, and accruing value over the years, a whole life insurance policy may be a good way to get your child started off on the right financial foot.