[Emmet]

I would like to hear your opinion on Life Insurance for kids, and in what cases it may be appropriate? With your help I would like to try and convince my wife that in our case this is a horrible horrible idea.

Our daughters are aged 4 & 7 and are in great health to the best of our knowledge.

My wife suffers from “what if, what if, what if syndrome” and kinda feels like its a safety net for if any pre existing conditions would occur God forbid.

I absolutely hate the idea of Northwestern Mutuals tentacles in our lives and know this money would be a lot better served in 1000 other locations.

WWYD & TIA

[Wallace]

Life insurance has a primary premise. To replace income for those dependent on that income.

Who depends on your child’s income?

Literally everything else marketed as “insurance” is gimmick.

[Nancy]

I have a teenager and before doing some health testing I considered getting a policy as it could be harder to get one after. I didn’t end up getting it (and she got the diagnosis).

I was looking at it for uninsurable, long term if she has a family.

I’m leaving this concern in the future, it’s not a need today nor anytime soon

[Mary]

I have life insurance on all my kids, taken out as babies. The way I look at it is the math says no matter how old they live, they’ll still get more back from the insurance than what we’ve paid in.

I realize that doesn’t factor in interest and such, but I’m still glad we have it.

Plus, they can increase it up to 5x as an adult with no medical questions.

[Kevin]

1. NWM is a terrible deal, very overpriced. Shop around.
2. A person doesn’t need life insurance until/unless their hypothetical death would create a financial crisis for someone they leave behind.

Kids do NOT meet that definition.

[Jasmine]

If there’s no one financially dependent on the person then I don’t see why that person needs life insurance.

I assume your 4 and 7 year old don’t earn any income, let alone have anyone else relying on their income to survive?

The people for whom life insurance makes sense is parents of young children.

Most kids are completely financially dependent on their parents’ income and would be struggling financially without it.

Therefore parents may consider getting term life insurance on themselves.

[Andrew]

If it’s any sort of cash value/whole life on the kids… You’ll want to avoid that like the plague.

But if it’s a cheap term policy for a couple bucks per month… It doesn’t hurt.

[Frank]

No. And time to get a divorce from Northwestern Mutual.
If you cannot think of a better use for your money than this, you are either not thinking or you have too much money.

And THAT is the question. The question is NOT “is this a good idea” compared with doing nothing or buying lollipops.

The question is “is this the BEST use of money to invest for my child’s future” COMPARED WITH ALL OTHER POTENTIAL INVESTMENTS.

If you have not compared it with all other potential investments, you clearly have not done your homework. Have you done that?

[Lisa]

We spend very little on life insurance for our kids. Each policy has a cash value and when they were done college we handed it to them. Both chose to cash in and use towards a car.

It was there and avail when they were young in case they died somehow. They got cash value out of it in the end.

We don’t regret. Two kids down, one more to graduate and see what he does with his…keep it at a very low rate or cash it in too.

We do NOT have life insurance on ourselves.

We both earn more than enough to care for ourselves and have enough in retirement funds, should one of us dies.

I couldn’t stand those premiums.

[Melissa]

It seems like your wife is thinking that you will be purchasing a policy that will be for your children’s benefit as adults in that they already are insured no matter what their future health may be.

Well as a person married to an “uninsurable” spouse, I would still say don’t do it.

I also have two insurance agents in the family who are good people working for the best for their customers, and I say don’t do it.

While I do know that there are a few decent whole life options that aren’t going to rip you off, they are almost impossible to find among the thousands of bad deals, and most insurance agencies won’t even write them.

(What makes them a better deal is that the agent makes almost no commission for their work so the cash value builds better than most.

The insurance co. Is always going to get their share, of course). It is much better to build a nest egg for your kids if you are worried about their financial future.

For my family we have built a financial structure that doesn’t rely on life insurance just by making good financial decisions.

I’ll be fine financially if my spouse were to pass away. Would a million dollar pay out make life easier in that case?

Yes, of course, and if we could get a term policy we would, but since we can’t, we don’t worry about it.

We just make smart financial investment choices know that all of that would be at my disposal if the time ever came.

[Valerie]

I’ve always added the spouse and child options thru work because they are cheap. The child option is $10k for $2 a month.

Why is that a bad idea?

It would put a dent in the cost of a funeral.

She will be 18 in July and we will get her a policy of her own this summer when it’s cheap and she is healthy.

[Tristan]

What would be the purpose of it? Sometimes parents will buy policies to cover end of life expenses, but personally think that’s something to cash flow.

I can see a little more the argument that a term policy could allow you time off work to grieve, but it’s kinda “eh” for me.

I’d likely side with you that the money could be better used; even an account that’s “what if they turn 18 and need a down payment for a car; what if they get sick and pass and we need final expenses, what if they could use this money for trade school” etc.

a “what if fund” still for your wife, but a different way to go about it than insurance

[Cody]

Would a child’s premature death result in a financial burden for your surviving family?

[Ernest]

My company offers life insurance policies that provide $20,000 in coverage for each child. The policy costs less than $2 per month, so I have it—otherwise, I wouldn’t.

One reason to consider life insurance for a child is that losing a child is an incredibly traumatic event, which could make it difficult to work in the immediate aftermath.

A good friend of mine recently lost a child; she took several weeks off work and then transitioned to part-time for a while.

A life insurance policy could offer some financial support during such a difficult time, but a solid emergency fund can also serve the same purpose.

[Danie]

If you have enough cash to pay for a funeral I can’t think of a scenario where it would make sense

[Khry]

This is such a hard thing for me personally, because I guess culturally I am kind of superstitious and it feels like betting against my child’s life.

I know it’s not what it is, but I just can’t help feeling wrong about doing this.

[Billy]

My wife & I both have life insurance policies on ourselves through work. It’s $2/month to add on child ryders to our policies, so we do that.

It’s only $10k for the children, as it’s intended to pay funeral expenses.

For how cheap it is, we figured why not. But I certainly wouldn’t take out a separate, solo policy on my kids.

[Rick]

What if you put the money into etfs instead and when/if they have taxable income in their teen and college years you then move it into roths for them.

What if you set them well down the path of becoming FI.

Those are the what ifs I would entertain.

[Tony]

No! The purpose of life insurance is to financially cover the loss of financial support as a result of a death and/or to cover the cost of death arrangements itself.

In most cases it’s manageable to self-insure funeral arrangement costs, and it’s almost certain that your dependent isn’t financially supporting your family.

At the risk of being too morbid – but in terms of financial risk assessment – it costs an average of 17k to raise a child each year until the age of 18, which from my own experience is more than the costs associated with a funeral.

[Deidra]

FWIW, my husband is very challenging to insure and his parents got a policy when he was young, we didn’t keep it when it became our responsibility to pay.

And we didn’t get insurance for our son knowing he inherited a risk factor – he’s now got the same condition and I don’t regret not buying him insurance.

There is some privilege in that we’re pretty confident we’ll have savings and assets sufficient to support any future dependents of his and wouldn’t have to be back to work immediately if something happened to him.

[Lori]

My parents got me a Universal Life policy when I was a kid,
$25 a quarter. It’s a $100k policy.

Makes 5.5 percent interest in the cash value.

[Katie]

Life insurance for kids doesn’t make sense to me. No one is depending on income from them. I have 5 kids.

If one of them passed away we could cash flow final arrangements or worst case use their 529 since they will no longer need it.

Put the money in a 529 instead.

[Author]

Posts