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Should I buy life insurance on my child's life?
The main reason for
buying life insurance on anyone’s life is to replace income “lost” or
pay for expenses caused by the death of the insured person. If your
child dies, there’s no lost income, but there will be funeral, burial
and related expenses that could run to thousands of dollars, which
might cause a financial hardship to the parents of the deceased child.
Another reason for buying life insurance on a child’s life is to guard
against the possibility that, when the child is older, he or she might
not be able to buy life insurance because of intervening illness or
other circumstance.
Still another reason for buying life insurance on a child’s life is
part of a program to teach the child financial responsibility.
Typically the insurance is whole life insurance, ownership of which is
transferred to the child when he or she turns 21.
Most insurance advisors recommend that families spend their insurance
budget to buy life and disability income insurance on the parents
first, before considering insurance on children’s lives. Death of a
parent, particularly an income-earner, could have financial
consequences that are devastating compared to the financial effects
from a child’s death. |
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