Buying Whole Life Insurance for a child is first, for the obvious, to provide a death benefit in case of death. You may think this is not necessary, however from my personal experience with losing a child of 17 years, a small death benefit was great to off set the loss of income during our grieving.
The second, is many parents or grandparents like to provide a "gift of Life" to the kids using Whole Life Insurance since it does grow cash value which can be used in the future for several expenses such as college education, helping to purchase a first home, etc.
If you have a specific question for your child or grandchild, do not hesitate to ask. There are many ways to design a plan to meet your families needs.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
This was once an extremely popular idea. A child can almost always qualify for life insurance, something that might not be true by occupation, avocation or health in the future. The premium will never be lower. It becomes a gift that a parent can pass to the child later in life that is often worth more than the premiums paid. It provides a death benefit in the event of premature death. Many parents prefer a limited payment whole life policy so that all the premiums are paid prior to gifting the policy to the young adult.
First, while no one likes to contemplate the passing of a young person, death has no respect for age. The cost of a funeral for an 8 year old isn't going to be any different than for an 80 year old. So, reason number 1 would be to protect you and your family from that unexpected expense.
Life insurance rates are based upon life expectancy among other factors. Obviously the life expectancy for a normal child is expected to be several more decades which translates into many years for the life insurance company to invest those premium dollars before they eventually pay the death claim (assuming the policy is kept in force, sadly it's not unusual for a child to become an adult and take over the policy and discontinue paying the premiums).
On a more positive note, a properly structured whole life insurance policy builds up cash value. The cash value accumulation of a whole life insurance policy from someone's childhood until they reach retirement age can amount to a sizable asset depending upon the face value (death benefit amount) of the policy. In the ideal scenario you will leave your child with a paid up life insurance policy and a financial asset for their golden years. Decades from now your child probably won't remember many Christmas or birthday gifts they received from you but a good whole life insurance policy can truly be the gift that keeps on giving.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Why buy whole life for a child? Well I guess I can tell you why I bought whole life for my kids. In no particular order or rank, I bought whole life because that is the cheapest if will ever be, those policies will become cornerstones of their financial lives. Much like buying a piece of property they now have something to build on. They have future guaranteed insurability with these policies as well What that means is they can't be told "no" by the insurance company, even if they are no longer insurable. Sort of like a stock option. And finally for this post if either of my kids were to die before me I would be devastated. I would be crushed as I have great kids. So insurance on them would help me get through their passing by paying bills that still need to be paid. I am planning for their future living with these policies and accepting the aspect of the possibility of their early passing and the help they would provide. I could never imagine having an argument with a spouse over what headstone to buy. Whole life on a child is an investment in their future, not just their death.
.JPG){kind=avatar}
The second, is many parents or grandparents like to provide a "gift of Life" to the kids using Whole Life Insurance since it does grow cash value which can be used in the future for several expenses such as college education, helping to purchase a first home, etc.
If you have a specific question for your child or grandchild, do not hesitate to ask. There are many ways to design a plan to meet your families needs.
Life insurance rates are based upon life expectancy among other factors. Obviously the life expectancy for a normal child is expected to be several more decades which translates into many years for the life insurance company to invest those premium dollars before they eventually pay the death claim (assuming the policy is kept in force, sadly it's not unusual for a child to become an adult and take over the policy and discontinue paying the premiums).
On a more positive note, a properly structured whole life insurance policy builds up cash value. The cash value accumulation of a whole life insurance policy from someone's childhood until they reach retirement age can amount to a sizable asset depending upon the face value (death benefit amount) of the policy. In the ideal scenario you will leave your child with a paid up life insurance policy and a financial asset for their golden years. Decades from now your child probably won't remember many Christmas or birthday gifts they received from you but a good whole life insurance policy can truly be the gift that keeps on giving.