Way to Save #55: Avoid Children’s Life Insurance

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The purpose of life insurance is to replace the earnings of a key breadwinner in the event of untimely death. While the death of a child is certainly a tragedy, it’s rarely a financial calamity. There are better investments you can make for a child.

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  • NarrowGap

    Based on your very narrow definition of the purpose of life insurance I would tend to agree with you, however….Life Insurance is a magical financial product whose benefits extend well beyond income replacement. Why buy a modest amt of life insurance on your child? First, the cost of a life policy on a child is minimal. We’re talking McDonald’s money here. Second and most importantly is what life insurance will do for this family. Divorce rates in the US hover around 50%, after the death of a child even higher. LI provides the $ for time off & counseling, in other words….time for this family to heal. And yes, divorce is a financial calamity.

  • http://www.buildyoursoulpurpose.com Brandon R Allen

    Your article assumes that the same child will qualify for life insurance once he/she becomes an adult. A responsible parent insures that a child has as much access to financial tools as possible. What if your child is diagnosed with diabetes? Good luck getting life insurance that’s affordable then. This tip is a great reason why you don’t make decisions based primarily off of money.

    • NarrowGap

      Excellent point Brandon. Kudos…

    • Heather

      I agree with you Brandon….I have recently been diagnosed with a rare form of heart disease which is hereditary in nature. This means my children have a 50% chance of getting the same disease. If I did not get life insurance for my children while they are insurable then I am far from a responsible parent for not looking out for their future. I can guarentee that they will not be insurable if they are ever diagnosed. Purchasing a policy now with the option to increase at a later age without having to prove insurability is the smartest thing I can do for my children.

  • JMC

    Really? Consider this – one great reason to buy insurance for a child is that you are also making sure that they will be insurable in the future – regardless of whatever diseases or other problems may arise.

    In general, the consumer should be wary of any advice that sounds like “always do this” or “never do that”. Financial services, including life insurance, are far too complex to be considered a one size fits all commodity. The best advice? Find a representative that you trust, and ask for their help in determining the best course of action for your specific situation.