Life Insurance Quotes

Emotions run high when parents and grandparents plan for a child's future. If you are considering life insurance for your child, it's a good idea to step back from the sales pitches and consider you and your child's needs before you make a purchase decision.

Often parents and grandparents are pitched "special opportunities" by insurance agents to add children to their policies — opportunities that the agent claims come up only every few years — so there's pressure to make a decision right away. Braun Mincher, an award-winning personal finance expert and author, says consumers should be wary of life insurance products for children, especially ones with teaser rates of $1.

It's wise to view life insurance is a product that financially protects your family should you pass away. But children don't have anyone relying on their income.

"The benefit is guaranteed insurability, so if your child is stricken later with a serious illness that would disqualify them for an insurance policy, they are already exempt from [being denied for] any pre-existing conditions," he says.

"It’s a nominal insurance that usually provides around $25,000 in coverage," says Mincher.

According to the National Funeral Directors Association, an advocacy group for the funeral services profession, a funeral for a child can range from $6,000 to $20,000. The average family may not have the funds for those expenses, and that's where life insurance can help. However, "statistically speaking, the mortality rate is so low for children that it's hard to justify this type of insurance. It is usually used as a way for agents to get in the door to sell you other types of insurance policies," says Mincher

Many policies purchased on the lives of children have an option for the child to buy additional insurance when he or she comes of age. While there are cases where a child develops a chronic condition that would make them uninsurable later in life, the reality is that most young adults can easily obtain insurance coverage for reasonable rates.

Buy with your head, not your heart

There are other places to put your money that may make more long-term sense. For example, making sure the child's parents have sufficient life insurance protection is the first place to start.

If you are worried about funeral expenses, you can buy term life insurance coverage for yourself with a small death benefit rider to cover children.

In addition, "a college-savings plan is one of the best investments you can make on your child because you receive compound interest tax-free," says Mincher.