Oct
5
What is the Purpose of Life Insurance Policies for Children?
Posted by harry Comments (8)
ILO asked:
I thought life insurance policies were for the remaining family members after a person’s death. For instance, the main worker in the family should get a life insurance policy to ensure their spouse and children have enough money if somethign were to happen.
I thought life insurance policies were for the remaining family members after a person’s death. For instance, the main worker in the family should get a life insurance policy to ensure their spouse and children have enough money if somethign were to happen.
Now since children do not contribuite to a household income. Why would there be life insurance? Besides the funeral costs, their death would not impact a family financially, would it? I just saw a commercial for one, and it got me wondering. I am only 16, so no rude comments if I have the point of life insurance all wrong here.
Categories: Life Insurance
You are on point. I just heard Dave Ramsey – financial talk show host – mention this very thing. He just said only get enough to pay for funeral expenses as they can be expensive.
No, your correct. The only real reason is so that is there is a death, the policy, normally $5000.00 will cover the related funeral expenses. Sometimes, the children will continue to carry the insurance, but normally it ends at 18 or 21.
Actually, there is another reason besides funeral expenses…if you develop a health condition at a later age and have had a policy since you were a kid you don’t have to worry about finding someone who will insure you when you are older.
When a family doesn’t have money to pay for service at a funeral home, i.e. preparing the body, plot for a burial, urn for a cremation, funeral service, taxes, etc. then YES it helps.
Also if the child died in an accident or was medically treated, life insurance can go to help pay off any medical debt, esp if the parents had no medical insurance, or had a crappy medical insurance like an HMO.
I know it’s “morbid” to think of taking a policy out on your own kids, but things happen. My cousin’s little girl passed away from Leukemia 4 years ago. she was a single mother working a part-time job and going to school full-time after her husband abandoned her & her daughter. if she hadn’t had life insurance on her daughter she wouldn’t have been able to take care of the funeral arrangements or medical bills.
My 9 month old daughter has life insurance. I don’t remember how much her policy is right now though, I’d have to track down the contract.
I got it in case something were to unfortunately happen to her so we could cover funeral costs. It felt really morbid getting her life insurance, I’ve had her insured since she was 2 months old.
I got her a 20 year policy so when she turns 20, she can decide if she wants to stick with the company I chose or if she wants a different company or even a different policy with the same company.
So basically, life insurance on a child is to ensure that the family will have the money for a funeral and burial and everything if something were to happen.
Well like if the kid had cancer for like 5 years and then finally died, it could pay the doctor bills off and the funeral cost. Those things aren’t cheap.
The MAIN reason for purchasing life insurance for a child is for the LIVING benefits associated with Life Insurance (after all it is life insurance NOT death insurance).
While it will provide money in case of a child’s death, that is hardly ever the reason for purchasing such a policy. At such an early age you may obtain a “whole-life” policy for extremely cheap which will accumulate tax-free gains for your child, while also producing the aforementioned death benefits.
This is often the best/safest way to save for a child or your children’s future, whether college, their retirement, or just a nest egg.
If you have considered this to be an obtain or realize just how cheap it is, this may be the best thing to give you young son or daughter.
If you have any questions feel free to e-mail me at
There are many reasons, but here are some of the most common:
To Pay Funeral Costs – It’s meant to help pay off funeral costs and the cost of living while grieving. If someone to lose their child and had life insurance on them, then hopefully they would have the financial ability to take off time from work and grieve over their loss.
Insurability – It is wise to purchase life insurance as young as you can be. As you grow up, you might have a decrease in your medical status, which may lead to you being rejected for insurance, or be required to pay more or even be excluded for preexisting medical condition. Buying your child life insurance buy him/her also the opportunity to continue it as adult at favorable rates
Savings Plan – Some life insurance plans for children build cash value which may be used to take a loan from in the future.