There is a serious ongoing debate about whether or not it is appropriate or necessary to buy life insurance policies for children, and if there is any benefit to the purchase. Parents who would buy life coverage for their children do so because they feel that they are helpful financial tools that play an important role as a part of a larger savings and investment portfolio.
However, others would say that for the majority of families, buying a life insurance policy for someone that young is typically wasteful, since it will rarely replace the income that was lost. A strong view is against buying a life insurance policy or a child, because the real reason for life insurance is for replacing somebody's income.
Term life insurance policies are different, as they are less expensive, but permanent life allows cash value to accumulate so that it can be used at a later date. One of the reasons that many people buy permanent life insurance for kids is to help to provide them with greater protect their insurability in the future. This is because these policies can be continued into the child's adulthood.
Many people use life insurance as a way to save money for a child's future. However, there are a number of far superior ways for saving money, especially if a college fund will be needed. On the other hand, some might want to consider a child term rider on their own life insurance policy. These benefits are usually low cost and are mainly used for funeral expenses due to the benefit amounts are not that high.
Whole or universal insurance is often presented as insurance with a savings vehicle.
Life insurance sales agents will try to convince you to use this insurance as a way to save for your kids. Even though the life insurance costs are relatively low for young chidlren, it may be a complete waste of money. The problem is that the administrative cost of the life insurance is so heavy that it eats into any returns the savings makes. Also, the investment choices that universal insurance offers are very limited.
If you are interested in saving for your children's future, a better idea is to do so with the lowest cost and greatest choice. Making a conscious choice about this is also a great way to teach kids about money.