As a parent, we never want to think about the death of our child. Nonetheless, it is better to prepare ahead, than be caught off guard. However, death isn’t the only reason you should buy life insurance for you child.
Here are ten potential reasons why some parents might choose to do so:
Financial security: In the unfortunate event of a child’s passing, life insurance can help provide money for the family. Having some extra funds to be able to take time off work for grieving may be helpful to get through an extremely hard time.
Affordable premiums: Because children are generally healthy and young, monthly costs for life insurance policies can be very inexpensive.
Future insurability: If a child gets a serious health condition later in life, they may become uninsurable. Purchasing life insurance while they are young can help ensure they will have coverage in the future. Coverage can generally be added to small policies during certain periods of the child’s life. Adding to the current policy is possible without evidence of insurability. This means that if some type of disorder has developed, they can add coverage regardless of health.
Accumulation of cash value: Some types of life insurance policies accumulate cash value over time. This cash growth can be used for future expenses such as college tuition, down payment on a home, purchasing a car, etc.
Covering funeral costs: Funeral expenses can be a financial burden on a family. Having life insurance can help cover these costs.
Supplemental retirement income: If a policy accumulates enough cash value over time, it could be used as a supplemental source of retirement income for the child.
Potential tax benefits: Depending on the policy and the child’s circumstances, there may be tax benefits to purchasing life insurance.
Ensuring insurability for future generations: Some policies allow for the transfer of ownership to the child when they reach adulthood. This ensures they will have life insurance to benefit their own children.
Helping establish financial responsibility: Purchasing life insurance for a child can help teach them about financial responsibility and the importance of planning for the future.
Peace of mind: For some parents, the peace of mind that comes with knowing their child is protected by life insurance can be invaluable.