Should You Get Life Insurance for Your Kids?

My father was a financial planner, and he got his start by selling insurance. That meant Dad had some very strong opinions about insurance in general, and life insurance in particular. He was not shy about sharing those opinions with a captive audience — aka, his daughter.

Even though I heard Dad opine (and rant!) on any number of finance-related subjects, the viewpoint that stuck with me most was Dad’s stance on life insurance for children.

“There is no reason whatsoever to ever buy such a product,” he told me on more than one occasion. “Life insurance is for income replacement. Policies for children are morbid.”

While part of Dad’s objection to life insurance for kids stemmed from the exploitative practices you can find among disreputable insurance salespeople, he was also quick to admit that his own superstitions about tempting your children’s fate added to his distaste for the products.

Though dear old Dad was right more often than not, I have come to see much more value in children’s life insurance than he did. Here are some compelling things to consider before purchasing life insurance for your child. (See also: Term vs Whole Life Insurance: Here’s How to Choose)

Funeral expenses

The average funeral in America costs about $10,000. Financial experts (including my father) might say that parents needing to pay such expenses for a child should use their savings to do so. But considering the fact that half of all Americans couldn’t come up with $400 in an emergency, the expert opinion may not match most people’s financial reality.

My dad did have an answer to this objection, however. There are many funeral homes that will offer their services free of charge for families who cannot afford the burial costs of losing a child.

That means parents who are considering life insurance for their children just because of the potential cost of final expenses might not actually need a policy. Not only is it unlikely that you will ever need the insurance payout, since it’s relatively rare for children to die, but you will likely be able to find financial help or free-of-cost services if the worst should happen.

Income replacement

Dad made it clear that he believed life insurance was for income replacement only. So unless you’re raising a child star, there is no reason to purchase a policy for your kid. (And you didn’t want to get Dad started on parents who pushed their kids into show business.)

However, Dad’s view didn’t consider whose income will need to be replaced after the death of a child. The majority of children do not have an income,…

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