When dealing with insurance agents, you are probably asking whether you can ask for insurance discounts, or for a much more flexible policy. This is with regard to life insurance in general; however, when it comes to life insurance for your children, you need to ask a different question. Is life insurance necessary for your children?
There are many factors to consider before you make a decision. Some financial consultants suggest buying a term insurance of 10, 20 or 30 years that would cover your children during such a period. If you your child dies within that term, you will receive some death and funeral benefits.
Others suggest buying a full life insurance that covers your children instead of buying a separate policy one for them because you can also transfer the policy to your children when they reach the right age.
To help you figure it out well, here several reasons you should go for or against life insurance for your children.
It Helps You in Funeral Expenses and Related Costs
For: In case of your child’s death, life insurance for your child will provide you with enough money to cover almost all the funeral and burial expenses. You can also receive some money that is normally given to the family of the child in order to get by after a tragic event.
Against: Almost all sources of statistics will show that the likelihood of children dying compared to adults is very low. If that is the case, it would be more advisable to set aside an emergency fund and use it in the event your child dies, which is very rare.
It Ensures the “Insurability” of Your Child Later
For: If your child becomes unhealthy and develops some illnesses that are difficult to cure, getting an insurance policy later will become very difficult. However, if you insure of your child at early stage, you won’t have to worry whether or not you can get another insurance because he or she is already insured.
Against: According to Amburgey, “The vast majority of 20- and 30-something’s have no problem getting insurance.” This shows that there is very little problems for older children or young adults in getting insurance. Also, according to Alfonso, your child’s “insurability” can actually reduce your chance of getting an insurance with high-value amount.
It Offers Savings Which Can Be Used Later
For: Every life insurance policy for children has corresponding elements of savings. While you keep on paying for the premium, a certain percentage will go to your savings. This means a certain percentage of your child insurance can be considered savings, which can be withdrawn and used later minus a surrender fee.
Against: The problem with insurance policies is that they can eat away your savings when you decide to withdraw in the future. When it comes to savings, you will be better off with a time deposit account or a simple savings account. In this way, you won’t have to pay some extra fees. Instead, you can earn interest overtime.
It’s not easy to decide whether or not a life insurance for your child is necessary. However, it’s really up to you to decide to choose if it’s in your best interest to do so.
On one hand, you could get a policy that could be converted in a way to pay for college later, but on the other hand, you might think it’s not worth the hassle. You can always ask your insurance agent if curiosity takes a hold of you.