How Young Is Too Young for Life Insurance?

Traditionally, parents buy life insurance policies for themselves to provide for their children in their absence. However, there are times when parents may want to consider purchasing a life insurance policy for their child.

Why. The most cited reason why you might want life insurance for your child is the payment of final expenses, such as outstanding medical bills and funeral costs. While that is a good reason for insurance, other scenarios may also make life insurance advantageous for the young and may be a bigger concern, financially, than end-of-life expenses.

For example, when your child turns 18 and goes to college, you might incur significant debt by cosigning loans.

Today, a private college costs an average of $38,589 per year, more than $150,000 total. It is likely you are expecting your child to pay off that debt when he or she graduates.

But what if he or she cannot, due to an unfortunate illness or accident? Life insurance would help you pay those loans.

As this scenario suggests, there are many moments in an individual’s life when life insurance may be needed, regardless of the person’s age.

Why now. Feel free to reach out to our office to discuss your individual financial situation, so we can help you keep your children in mind as part of a comprehensive financial plan. Typically, life insurance premiums on a child are very low, so you can purchase a lot of insurance for a long period of time. Moreover, when you purchase life insurance for a child, you guarantee his or her insurability, and that can be important as the child ages.

Note that each insurer has guidelines on when life insurance can be purchased for a child and how much may be purchased. For example, the child may need to be at least a few days old, or the amount of insurance on the child may be limited to less than that of the parent’s personal policy.

Contact Michele or Kristin at 720.683.0010 or info@rpmagency.com for more details.