Should you buy life insurance for children?

If you pack a room with financial planners and life insurance agents and then ask this question, you’ll have some great entertainment.  It will be on a par with a professional wrestling match or an MMA cage fight.  Not to be one for the faint of heart, I thought this would make for an interesting topic.

To help answer the question, let’s begin with why some answer “yes” to the our question;

  • It’s a great, low-cost method to set aside money for a college education
  • Guarantees the child will have life insurance if they become uninsurable as an adult
  • It will pay for a funeral if something goes terribly wrong

On the other side of the coin, people say “no” because;

  • There are much better ways to fund a college education
  • The odds of a child becoming uninsurable as an adult are pretty slim
  • Even if something goes terribly wrong, there are ways to fund a funeral
  • Unless your child is pretty much guaranteed a starring role in an upcoming TV series or is the next Harry Potter, there’s no income to replace

As someone who’s helped raise three sons and is becoming acquainted with grandchildren, I’ll weigh in with my perspective;

  • I believe life insurance is to replace income if a wage earner dies
  • I’ve only seen a few kids who truly qualified as a wage earner, Daniel Radcliffe is an excellent example
  • Buying life insurance for a child is not a great way to save for college – go with a 529 plan
  • If you wish to set your kids up financially, do so only after you’ve addressed your needs (financial and insurance) and then do work on theirs with mutual funds and IRAs
  • Life insurance is not a demonstration of love for your child.  If someone asks you, “Don’t you love your child?” kindly walk them out.

I personally believe the answer is no.  Life insurance is not an investment, either for a child or an adult.  What life insurance is truly designed to do is to replace lost income.  In most cases, they have a long road in front of them before they have to worry about that.  So enjoy watching the argument without being pulled into the fray.

If you agree or disagree, weigh in with the your thoughts in our comments section below or on our Facebook page.

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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