Is life insurance for children a good idea or a waste of money?
Ask that question at a dinner party and you’re bound to get some pretty intense responses. That tends to happen when you talk about kids and death in the same sentence. But let’s take a practical look at the pros and cons of life insurance for children and decide for ourselves whether or not it’s worth it.
Neal Frankle from Wealth Pilgrim argues that you should never purchase life insurance for your kids. The purpose of any life insurance is to protect your family by replacing income that you are no longer capable of producing it. But children generally don’t support their family (ok, maybe if they have their own show on the Disney Channel) so there’s really no need to ever buy life insurance for children.
Over at Best Rates In, Miranda Marquit listed life insurance for children as one of the 5 most useless insurance policies. She suggests you’d be better off putting the money aside in an IRA or 529 plan.
But that’s just one side of the story…
Melissa from Parenting Family Money points out that the insurance doesn’t necessarily have to replace your child’s income…it could cover funeral costs or replace income that you would lose if you were too incapacitated by grief to work. She raises an interesting point that many people never consider. Evan from My Journey to Millions offers a similar stance and he actually points out that he will purchase life insurance for his own child.
So as you can see there is too sides to every coin. I never purchased life insurance for any of my children and I still don’t agree with those who do, but I do understand where they’re coming from.
Readers, what’s your opinion on life insurance for children? Do you think it’s a wise investment or a waste of money?