Before buying life insurance for a child, make sure you have enough coverage for yourself. Protecting the financial well-being of loved ones takes priority. In fact, insurers usually require that parents have their own life insurance policies with at least as much coverage as they want to buy for a child as a prerequisite for insuring a child, Hoang says.
You also should make sure you’ve tackled other financial priorities before buying life insurance for a child. Building an emergency fund, saving for retirement and paying off high-interest debt should take precedence.
Take care of yourself before you take care of your kids. Then, if you have room in your budget, you can consider life insurance for your kids.
Although life insurance for a child doesn’t always make sense, it can be a good solution for some families. For example, high-income parents might find the ability to transfer wealth to their children through a life insurance policy appealing. Or they might like the tax-advantaged growth on the cash value portion of the policy.
Also, if your family has a history of genetic medical conditions such as diabetes, it might make sense to insure your child. Then you won’t have to worry about whether your child will be denied coverage later in life if he or she develops a medical condition.
Working with a us can help you decide whether life insurance for your kids is a good fit for your family and your overall financial situation. Connect with us today to know more!