WEDNESDAY, AUGUST 22, 2012
The purpose of life insurance is to replace a wage-earner’s income, so is it worth it to provide life insurance for someone who is not currently working? What about life insurance for your children?
 For some parents, life insurance for their children is a great way to put money aside for their children’s future and it guarantees their child will have insurance if they develop an illness later in life. Particularly if there is a family history of health problems, such as diabetes or heart disease, a life insurance policy as a child might be the only way for them to get insurance when they're in their prime. Still others say that life insurance policies for children are unnecessary and a savings account is sufficient.
According to research from the American Council of Life Insurers, only about 15 percent of people under the age of 18 have life insurance. This number has remained unchanged for more than a decade, indicating that life insurance for children is not a wildly popular idea. This is probably because most parents don’t want to consider the possibility of burying their own children. When brand new babies, babbling toddlers and running children are growing up, parents see no reason to provide life insurance to such a new life.
There are two main reasons to consider life insurance options for children. One, is to provide an avenue for obtaining a guaranteed life insurance policy in adulthood, the second is as an investment opportunity.
For those parents that take advantage of children’s life insurance for the purpose of providing life insurance as an adult, coverage is initially purchased in a small amount, generally in the range of $5,000 in a simple 20-year policy that is renewable and has the ability to increase to full life insurance when the child becomes an adult. This method will provide life insurance options for adults without any medical testing necessary.
For those who use life insurance as an investment tool, most agents agree that there are better ways to save money for college. If parents want to do something for college, it is much more appropriate to put it into vehicles that will benefit children while they're living. If parents take and put the same amount of money into a mutual fund or an annuity, they would have more money in cash assets.
According to insurance statistics, most parents are underinsured themselves, and purchasing life insurance on children when the parents are not adequately covered is a severe mistake. Once their own needs are completely covered, parents can choose for themselves and for their family which option is best for their children.
By Matt Reynolds - Google+
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