Q: Should I Have Life Insurance On My Children?
Dave does not recommend buying life insurance on children especially Gerber Life and other plans that either try to act as a savings/college plan or to guarantee a child’s insurability into the future. It is nothing more than just another method of selling cash value (whole life) insurance, a poorly designed financial product, to people that “really” don’t need it. Since the likelihood of a child’s premature death is very rare, he feels this expense should be handled through the parent’s emergency fund. However, since many people want to have some type of protection, a child rider that is part of an individual’s term life policy is the only alternative he feels is a reasonable approach. Most company’s offering a child rider option charge $50 to 60 per year for $10-20,000 of coverage that covers all children in the household. When it is time for them to buy life insurance they will have the ability to do so even if they have health issues at that time. It is a scare tactic used within the industry to try and imply the likelihood of never being able to get insurance which is a highly unlikely event. You can use these funds more effectively with better investment options such as ESA’s (Education Savings Accounts), 529 plans or just regular mutual funds.