Does My Child Need Life Insurance Coverage?

Life insurance coverage is a great way to protect your family and ensure they are taken care of if the worst happens. To understand if your children need coverage, it is important to first understand what life insurance coverage does and why you would get it for your children. Life insurance provides a stream of income that will replace lost wages that result from an untimely death (such as a car accident or heart attack). It usually pays out monthly, quarterly or annually until the child reaches adulthood and can support themselves. It also provides money for funeral expenses, emotional support for those left behind, college tuition funding or other long-term needs. There are several different types of coverage and the type you choose depends largely on your family's needs.

The thing to understand when looking at life insurance for children is that it is an investment. The chance of having to provide this sort of support is small, but if it happens, you would have received the proceeds from the policy. Since the value of the policy will decrease with time, getting a larger policy and/or rolling over the proceeds into a new policy would be an ideal solution for long-term protection.

In general, the younger the child is, the less coverage is needed. The reason for this is because they have fewer responsibilities and therefore their needs are less. Also, they are more likely to live to an older age than teenagers or young adults.

Children age 15 and younger should be covered to about $200,000 if they are not expected to earn an income or go to college. If your child does not go to college and has no other immediate family besides you, then increasing coverage up too $300,000 would be advised if you have more to spend. You should also have a separate policy for yourself with enough coverage so that anything remaining on yours will cover theirs as well.

There are several different types of life insurance policies. The most common is a term policy or term-life. Term-life has a set schedule for premiums and payments. For example, an annual premium for 20 years would be $10,000 (20 x $500) with payments made each year until the child turns 18 and no longer needs the coverage. These policies are great in that you receive the benefits, however they provide little flexibility to change your coverage later in life. Policies that can be changed once your child reaches 21 include universal and variable universal term life insurance policies which are paid directly to your beneficiaries. These policies are great because they give you the flexibility to cover your child as long as needed and also change coverage if needed.

Some companies provide coverage for children under certain conditions, however most companies do not provide coverage for children under the age of ten.

Sheetz Inc., a convenience store chain, offers an innovative program called the Look. Learn. Act. Save. program which provides free life insurance coverage for children to around $20,000 in value to all of its employees and their dependents until they are 20 years old so long as they maintain good grades in school (both in-class and homework/homework completion), participate in drug and alcohol prevention programs and attend health seminars throughout high school.

If your children are very young, life insurance is not necessary, but it is something to revisit as they age and become more independent. If you find that your children have a higher risk of needing coverage later in life (such as if they have health problems or if they are planning to go to college after high school), then you should look into getting some coverage for them earlier in life. If you end up with enough coverage for your child and yourself then you can get more coverage for yourself later in life when they no longer need it.

The early years of a child's life are extremely important and so it is very important to protect them at every stage. Life insurance does exactly that and its earlier you get it, the better.

Life insurance coverage can be very beneficial for you and your family. The flexibility of universal life insurance is great because it allows you to continue paying into the policy even after your child reaches adulthood. There are many different types of life insurance policies ranging from $25,000 to $5 million dollars, so you will have no problem finding a policy to fit into your budget. Check out our article "How Much Life Insurance Do I Need?" to learn more about how much coverage you need and what life insurance really costs.

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Posted by Bryan at 11:00 AM

I do believe that it is important to protect your children from financial hardships if they should ever become unable to support themselves. However, going into debt to save for their services is not something I would want to do. There are always ways to make money or even get things for free. Reply Delete

Life insurance is a very good idea for children. Very few of them are out there saying, "I really hope I have an accident and hurt myself so dad will get a nice big settlement." It's more about protecting your child's future should they be involved in some sort of accident or get sick and cannot work and the medical bills have piled up. Reply Delete

Life insurance for children is an excellent idea. I purchased a policy for my son when he was born of $100,000. It cost less than $100 per year and it is by far the best money I have spent on him. The peace of mind that it gives me is priceless. Reply Delete

I would love to get some life insurance on my child because I think about what would happen to her if something happened to me and she needed money so she could go to school or college and get a job or help her mommy out with money problems that may come up. Reply Delete

I am against the concept of "buying" a child's life just so that they can bury you when you die...My mother thought the same thing when I was a child but I did not buy into it...I think my mother and father would be pissed if they knew how much money they spent on me and I wouldn't be using it to bury them at a nice cemetery, I would be buying some things for my son. It will be a while before he actually needs life insurance so I'd rather save for college (which is always needed) first before buying myself life insurance. Reply Delete

As long as the child has some way to pay for their own health care, life insurance is both unnecessary and an insult as well.

Conclusion: Even though there are complaints from people who bought life insurance for their children/spouse/etc, they obviously don't understand the concept of life insurance or they would see that when you pay for a whole life policy, you pay monthly (or yearly) and then the company adds a little interest to it every year until your death. It is all in the contract that you sign.

Well, I hope this article has shown you what some of the disadvantages of buying life insurance for your child (or buying full coverage on yourself) are and should help your decision in buying or not buying life insurance.