Here’s the thing: you can take out a life insurance policy on a small child, but there is a whirlwind of debate within the insurance community on whether, or not, it is at all a sound financial – and ethical – decision to make. To establish a solid opinion, and to decide if your situation merits such a policy, you should really consider both sides of the argument – both make excellent points.

Sides and opinions aside, child-size life insurance policies are wildly unpopular when it comes to hard-core statistical fact. Out of the entire United States, only 15% of individuals under the age of 18 have a life insurance policy in their name, and that number hasn’t ever gotten even a smidge higher in over a decade – it has been lower, however.

This stat is definitely due to the lack of need for a child to have a life insurance policy and is also greatly due to how vehemently opposed a substantial amount of financial experts are to the very idea, for various reasons. Check out this link to visit GIO & learn more about getting your own policy.

Here’s a sampling of both the pro- and anti- arguments made when it comes to child life insurance for you to consider. To understand these arguments fully, you should find a financial expert from either side and let them give you their full rant. You should always side with what makes the most sense to you and to your situation.

For those in Favor of Child Life Insurance Policies…

…the argument is based almost entirely on cases where the child is either terminally ill, or faces a life-long disability. These unfortunate situations sometimes make a compelling argument for the merit of child life insurance policies, for the following reasons:

  1. Parents of a terminally ill child may have to take substantial amounts of time off from work in order to either care for the child, or out of a want to spend time with them should their condition quickly become worse. A life insurance policy can help offset those losses, as well as the losses accrued during the grieving period after the child’s passing.
  2. Parents may suffer financially after paying for funeral arrangements; a small life insurance policy can take care of these arrangements without adding extra stress onto parents who are already grieving.
  3. Children who have life-long disabilities often face a substantial amount of hardship obtaining affordable life insurance policies later in life, if they can obtain them at all. Parents can sometimes nip this in the bud early by buying a specialty policy, paying the premiums themselves, until the policy can be turned over to the child as an adult, as a more affordable option.

For those Opposed to Child Life Insurance Policies…

…the opposition revolves entirely around two different thought processes.

  • There Are Wiser Investments – It’s important to understand here that those who oppose child life insurance policies don’t do so because they believe parents should have to endure financial hardship should their child pass early, or that they shouldn’t plan ahead to compensate for a child’s disability – the opposition merely believes other financial investments are better and should be thoroughly explored first. For example, a good 529 can be set up to handle both situations, through the help of a financial advisor.In the case of illness, this can be a wise move, especially if it turns out that the child will live, after all – you won’t have been sinking money into a policy for years that it turns out, you didn’t need.
  • It’s Life Insurance Abuse – This opposition is a little more cynical in nature, but is no less valid, as there are individuals who take advantage of the life insurance system in these cases more often than one might think. There are grotesque cases of parents taking out life insurance policies on their children, and then doing the unthinkable to them, just to collect. With this in mind, it’s reasonable to understand why financial advisors feel very passionately about this subject. Life insurance was created to provide for loved ones who are financially affected by the loss of their main income provider. Since children are never the main income providers in any situation, taking out a life insurance policy on them – without illness or disability – is, in fact, an abuse of the system.

Now that you know the basic arguments from both sides, what are your thoughts on this controversial subject? Have you chosen a side?

Jesse Michelsen

Jesse Michelsen