3 Reasons to Buy Life Insurance for Children
There are 3 good Reasons to Buy Life Insurance for Children:
- Purchasing life insurance for a child may seem excessive, but in fact, funding your children’s retirement now is an extraordinary gift that can have both significant and long-term investment and insurance benefits.
- Unlike funds in 529 college savings plans, a juvenile life insurance policy’s cash value doesn’t have to be used specifically for education. It can be used for other purposes such as wedding expenses or a down payment on a home, for example.
- Another reason worth considering is the fact that many insurance companies would be willing to convert child life insurance into adult life insurance once the child reaches the age of 18 or 21. This can save money and ensure approval for the child later in their life. Obtaining coverage while insurability is still there. What if your child develop an adverse medical condition that makes coverage more expensive or not possible at all? Consider coverage now.
What type of Life Insurance should I buy for my child?
Permanent life insurance provides death benefit protection, creates a living legacy that will accumulate cash value with each passing year, and may help your child or grandchild get a head start on their financial future. Preferential tax treatment in that cash values grow inside of a policy tax free and death claims will be paid out tax free in most cases.
A permanent life insurance policy, on the other hand, has the potential to accumulate cash value each year. Cash values can be borrowed for any purpose—to provide a down payment on a first home, to help pay for college, to start a business or even to help fund a comfortable retirement years down the road. You can borrow against a life insurance policy’s cash value without a credit check or paying taxes but be aware that the loan might affect the policy’s longevity. Also, you can withdraw what you’ve paid in premiums tax free and pay income tax only on gains if you choose to surrender the policy.
Life Insurance for Children: The gift that never goes away
Provided you continue to pay the policy premiums, the life insurance policy you purchase for your kids or grandkids today can still be there years from now—something that material things can’t provide.
If you are on track for your retirement goals and find cash building up in your bank account, we’d encourage you to look at using a policy as an accumulation vehicle as well.
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