Should Your Children Have Life Insurance?

Life insurance is something most adults don't even think twice before buying. By the time you're an adult, life insurance is necessary because you've got bills to pay, and you own assets such as a car or home, in addition to possibly having a family. So, you naturally want your family to be taken care of in the event that something were to happen to you. Owning life insurance helps with this. But, what about your children? Do they need<a href="http://www.pivot.com/Learning-Center/Purchasing-Considerations"> life insurance</a>, too?

For some people, life insurance for your children is a great, low-cost way to set money aside for the future. Many permanent life insurance plans money market or investment accounts, along with the life insurance policy. By selecting one of these plans for your child, you can begin to more closely assess their financial future, knowing there is less concern because you're saving money via a life insurance policy now. Also, this way your children will have life insurance as an adult, in case an illness or other medical later in life makes them uninsurable. And if your family has a long history of serious medical problems or death due to a medical condition, the purchase of life insurance for your child or children now could help make sure they're not denied for insurance coverage later in life.

Those who don't think life insurance for children is a good thing say it's an outdated product that has been replaced by more effective savings tools, such as 529 plans or other college savings plans. And, still others say that since the purpose of insurance is to replace income, it's illogical to sell life insurance to someone who doesn't have a regular, professional job.

Whatever the reason, it is reported that saving for a child via life insurance just isn't a practical idea for many people, and only 15 percent of children under the age of 18 have life insurance. Additionally, life insurance policies on children under the age of 18 are typically around the amount of $5,000.

The most common way life insurance is purchased for a child is in cooperation with a 529 fund and perhaps other investment funds such as Roth IRAs. The parents who do opt to purchase life insurance for their child often are motivated by the idea that this way, their child will always have some type of insurance coverage.

Since life insurance premiums are partially decided on using income and earning potential, this can get tricky when trying to determine what a child's life insurance premium should be. However, many experts suggest basing your child's future earning capabilities off of your own. This way, you're at least making an educated guess about your child's earning potential.

Life insurance can be tricky for adults and especially when considering it for children. It's always best to consult with a<a href="http://www.pivot.com/Learning-Center/Purchasing-Considerations"> life insurance</a> professional before tackling one of these pivotal decisions, so you can more forward with confidence in your investments and yourself.