Children need life insurance

It depends on who you talk to. Most people assume that life insurance is just for working adults with dependents. While it's very important for working adults with dependents to have life insurance, they're not the only ones who can benefit. Some children can also benefit from having insurance of their own. Whether or not your child could benefit from having his own insurance depends on several factors. Read on to find out if an insurance policy makes sense for your child.

Family History of Medical Problems

If your family has a history of chronic health problems, buying your children life insurance policies protects their insurability as adults. If they're diagnosed with a major medical problem during their growing up years, they may find it impossible to get a life insurance policy to safeguard their own dependents--unless they already have life insurance.

Many insurance policies for children give you the option of increasing coverage or turning a term policy into a whole life policy. If you're looking at a policy for your child to protect future insurability, make sure the policy is renewable. Most of them are, and your child probably won't even have to undergo a medical exam when it's time to renew.

In a way, providing your children with life insurance policies helps you to look out for your future grandchildren, who may not otherwise be protected by their own parents' policies.

A Savings Tool

Some parents buy whole life policies for their children as a vehicle for saving for the future. Of course, young children don't understand or appreciate the wisdom behind saving early in life, but as adults they will be very grateful for your foresight.

Over time, whole life policies accumulate cash value from the premiums you pay and from interest. The longer you have the policy, the larger the cash value will be. This cash value can be redeemed to pay for college or even for a down payment on a home. If you secure a whole life policy for your child at birth, it will have accumulated a sizable cash value by age 18, just in time for college.

Collateral for Loans

Getting a loan as a young adult can be difficult. Most young adults don't have enough of a credit history to borrow much money. If that young adult has a whole life insurance policy, however, she can borrow up to 90% of the value of the policy, and the loan will require little or no interest payments. Most policies give people the option of repaying the loan to restore the death benefit or not repaying the loan, which reduces the death benefit. Again, this is a way that an insurance policy can secure financial options for your child's future.

There's no one-size-fits-all answer about whether or not you should purchase a policy for your child. You'll need to weigh the pros and cons for your own child's situation. If your family has a history of long-term medical problems or if you would like to give your child options for saving and taking out loans in the future, talk with an adviser or agent. You won't just be buying an insurance policy; you'll be purchasing peace of mind for the future.