Juvenile Life Insurance

Juvenile life insurance is frequently an emotional purchase by parents hoping to secure "protection" for their child, but may not be the most sound fiscal decision. That said, nearly 2 million policies were sold in 2005, with three main features: death benefits, cash value, and a guarantee of future insurability. The concern is that, no matter what the premiums cost, teen life insurance may be less valuable than the same money applied to parent coverage. Refusing this coverage might allow the purchase of more protection for the head of the household. If so, buying a policy may be a factor in underinsuring the breadwinner, especially when considering that the odds of a child age 18 or younger dying. Thankfully, it is low; only one in 3,000 children die according to industry reports.

Death benefits sound helpful--if one can even think in terms of their child dying. But if the premiums average $213 every year, consumers should determine how much more coverage they would gain if that same money were applied to term life insurance for a healthy adult. It might be in the tens of thousands of dollars, compared to juvenile life insurance. In the long run, it will be far more helpful to protect children by insuring their parents rather than purchasing coverage. Some adult life policies will offer riders that will provide death benefits to all children in the family to help cover funeral and burial costs. If a rider is available on an adult plan, it wouldn't be prudent to purchase separate policies for each child. Some juvenile life insurance guarantees future insurability: a promise that a child will never be denied coverage even if he faces a chronic disease. Again, the likelihood of a child being denied treatment in a family health plan is remote enough to make one reconsider the value of paying 18 years worth of teen life insurance. Mark 13:37 says "And what I say unto you I say unto all, Watch."

If this seems like an easy way to establish a childhood savings account, keep in mind that the premium includes a commission to the agent whose company also gains from using that money in investments. The return on investment (ROI) is so low that most other investment options sound far better upon inspection. Juvenile life insurance is a package that appears beneficial, but is buoyed more by emotion than financial wisdom. According to LIMRA, an insurance and financial services research association, 40% of 48 million households believe they do not have enough insurance. One fourth of the parents in the study believe that they don't have a solid plan in place to provide a decent standard of living if they were to die tomorrow. While teen life insurance might feel like an investment a "good" parent would make, it may be far less valuable than investing in the parents themselves.

For more information: http://www.christianet.com/lifeinsurance

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