You might ever though to give your children a life insurance. It’s true that buying insurance for your lovely ones is a great act. This will protect you to avoid terrible idea. But do you know that there are also the bad sides? Whole life insurance for children is the most common policy. It includes cash value that grows slowly from time to time. However, you still need to think about should you buy whole life insurance or not.
It’s not a Good Investment
The first thing you should know about whole life insurance for children is it’s not a good investment. You must be wondering why this type of insurance doesn’t suit your kids. It’s because they will be guaranteed only about 2% for life. Besides, the lower the policy you pay, the less also the insurance you will get. There will be administrative costs that can reduce your insurance. According to this, we can say that a whole life insurance for children is not a good investment. So, you should be really careful before decide to buy this insurance.
There is no Clear Certainty
Besides not a good investment, there is also no clear certainty of whole life insurance for children. You might think this insurance will cover anything when your children get a serious disease at the age of 8. But in fact, their insurance need is bigger than the adults which is about $ 500 thousand up to $ 5 million. It doesn’t even include the effect of inflation for the next 20 years. Even with this high enough price, there is no clarity for guarantee.
It Provides Cash Value at the Age of 20 with a Small Percentage
Cash value becomes the next reason why you should not buy whole life insurance for children. This must be helpful when you give them something higher in return. They will automatically get more money with lower strings attached. However, in whole life insurance for children, it will provide cash value at the age of 20 till 30. This is even with lower percentage which is 0 to 2 %. Not to mention, there will be big differences for decades too. In addition, there are also taxes and benefits that you should think about. In this case, you better give them extra money to save. This will be useful in the future without using insurance.
Remember that Your Children Have no Income
In line with the previous point, you should also remember that they don’t have income. You may can buy them insurance right now. But what about the future? You really need to think about this possibility. If you are independent for the financial, it’s not harm to live without life insurance. Both you and children can make a better life plan.
Here are some basic reasons why you need to decide whether to buy or not. Of course, everyone has their own views about these reasons. This could be helpful for some and not for some too. But make sure that the insurance you choose is very helpful for children when they are twenty.