Life insurance for children is widely available, but is it a good investment? Many people purchase life insurance for their children because some clever agent convinced them it was a great idea, but in most cases, such a policy is an unnecessary expense. There are a few central factors that make your kid and most others less than ideal candidates for life insurance coverage.
Your Kid is Unemployed
Life insurance is intended to protect the financial standing of surviving dependents when a breadwinner passes away. Children have a notoriously low work ethic, and many of them are unwilling to even go on a job hunt, let alone maintain a job that makes them the main source of income in a household. Most non-famous children earn very low if any salaries for their work, and although their loss would be emotionally devastating, the lost income would be minimal and household expenses would likely decrease. Visit this link to find out more about what AAMI can offer you and your family.
Your Kid will Outlive You
Another core benefit of a life insurance policy is to provide for funeral costs after death, but children are typically vibrant and healthy, as they enjoy the benefits of a body with very low mileage. While a whole life policy for a child is guaranteed for life, very few people develop conditions that deem them uninsurable before adulthood. Modern medicine and an immune system working at full capacity enable many children to continue living for years, even decades at a time with a bit of good fortune.
A family with a history of illness or genetic concerns may want to consider a policy as a safeguard against future concerns, but the reality is that you are likely to need your final costs covered well before your child does. At the very least, your kid should be alive long enough to purchase a life insurance policy of their own, and rates for healthy young adults are extremely affordable.
Your Kid Can Go to College Anyway
Some life insurance policies are marketed as tools for educational savings. Although it is true that you can borrow against the value of the policy up to the amount in premiums you have paid tax-free, a mutual fund frequently provides the same benefits and much better returns while also having nothing to do with the death of your child. The money you would spend for insurance premiums would be much better used in a dedicated savings or money market account.
As an insurance provider, a child is the ideal choices for coverage. Their young age means a long future of collected premiums, and their good health means that they are unlikely to require a payout for quite some time. As a parent, you are better off investing in your child’s life than their life insurance.