Life Insurance for Children

Hi Terry,
Should I purchase life insurance for my children (ages 6months old & six years old) with the idea being that if they are unable to get insurance as adults due to illness, etc., at least they have something? Not sure if this is a wise way to spend my money. Thanks!

Terry Says:  I have always been firmly AGAINST buying life insurance on the lives of children.  Why pay the mortality costs of the insurance, when instead all of your money could be growing tax-free for college in a 529 College Savings Plan?!

There are some who say, well it gives them a head-start on owning insurance when they are older.  But if  they need insurance when they are older it means they have dependents — people who are counting on them to pay off the mortgage, or pay for college.  If your children reach this point, they will be able to purchase insurance then — especially with the income generated by their college education. And if they can’t qualify for life insurance, they are unlikely to have dependents.

Even worse, I have always asked “what would you do” with the insurance proceeds if your child dies — a horrible thought.  You certainly aren’t going to use the money to re-carpet the living room!  Recently, however, I was speaking with a woman who showed me a brochure for life insurance for children.  I gave her my thoughts, the same as I expressed above.  She replied:  “I’m a Salvation Army chaplain and I minister to inner-city families.  Many of them can’t afford to bury their children who are victims of violence.  Every day I try to find money to pay for burials.  That’s why I suggest these parents spend enough money to buy life insurance to bury their children!”  And that, my friends, is a very, very sad commentary on American life!