Being married with 2 children, should my wife and I get life insurance policies for each of our children?

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Asked March 5, 2013

1 Answer

Life insurance is important for everyone, of any age. Many people equate life insurance with bequeathing an amount to children or other dependents, but that overlooks the fact that if a child should pass away, the funeral costs still must be met. Additionally, purchasing a whole life policy for children avoids problems with medical conditions which may develop later and sets the child up with a financial tool that can be useful for the rest of their lives.

Another good reason to buy a life insurance for your children is that doing so will keep the rates low for the duration of the policy. You see, as insurance companies calculate the risks of insuring someone they use that person's age as a factor, adjusting the cost of the premiums over a much longer expected coverage term. It is also possible to purchase a single premium life insurance policy for children, leaving no additional costs on the policy.

What to avoid for your children is a term life insurance policy. It is better to insure them against a life of peril than to have a policy which expires when the child becomes an adult. And a permanent life insurance policy offers other benefits that are not available through term life coverage. A term life policy on yourself to make certain that funds are there for your children to attend college or achieve some other goal is a good idea, but a term policy for your children probably is not.

Most whole life insurance policies build up a cash value over time, and setting up a policy for each of your kids can add up to a sizable sum when each one is grown and ready to leave the nest. The face value of life insurance policies accrues based on the premiums paid into the policy compounded by earning interest against the face value. This money can be borrowed against at any time, without taxation, credit checks or collateral.

Even if your budget is tight, purchasing a funeral expense policy will prevent possible financial hardships if the unthinkable should happen. As with other types of permanent life insurance, the policy will serve its purpose for the children at any age, forever removing the concerns of funeral costs for the kids. Funeral expense insurance tends to be much less expensive than other types of permanent insurance, but the policies typically pay out to a funeral parlor or director, not to a named beneficiary.

Answered March 5, 2013 by Anonymous

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