The purchase of a whole life insurance policy on a child can be compared to using a seatbelt for protection against an unforeseen accident. Good parents strap their children into safety seats, knowing that they are doing their best to keep them safe and secure. Although the purchase of insurance for your child may not be considered a necessity, and there is no guarantee that your child will ever need to have it, several million American households have purchased whole life insurance policies for their children.
Of course you can still be considered a good parent without making that type of purchase, however other parents realize they are protecting their children from experiencing a financial burden later in life.
Great Gift IdeaIn fact, the purchase of a life insurance policy for a child is a great gift idea because it gives him or her a financial head start. A whole life policy on a child accumulates cash value. Therefore, if a family member contributes towards a whole life policy on a toddler, the matured policy becomes a great gift that can be used to pay for college tuition, or perhaps a down payment on a home. Also, the child will have the security of knowing there is a whole life insurance policy that can offer financial protection in the event of a medical emergency.
In addition, parents will gain peace of mind when they know there is a whole life policy on their child. One never knows what will happen, and it is comforting to be prepared for the unknowns in life.
When the Experts don’t have ExpertiseSome experts say that buying life insurance for a child is not a sound financial move. The experts argue that insuring your child is not necessary because children are not assets that need protection. In other words, these experts argue that the only family member needing insurance is the provider. However, there are many reasons that those arguments are flawed. For example, some health concerns will prevent your child from purchasing insurance when he or she is grown. In the event your child works in a hazardous occupation, engages in dangerous activities, or becomes uninsurable for any medical reason, his or her only option would be to pay for an expensive high-risk policy. In contrast, by purchasing a policy for your child now, you guarantee that he or she will always have life insurance coverage.
Therefore, besides the obvious financial benefits of purchasing a whole life policy for your child, by choosing to apply the principle of "seat belts," your children will grow up knowing that your practical choices gave them a financial head start in life.