Do Newborn Babies Need Life Insurance?

You just sent out the baby birth announcements and are wondering if insuring your baby is a good idea. Read on, you'll be surprised.

Which parenting couple would not want the best for their newly born child but what most have never considered is buying life insurance for their baby. Today, insurance companies offer life insurance policies for your child in order to provide him or her with a "financial head start." And why not when are rates affordable and above all guarantee your baby's future insurability, no matter how dreaded an illness should strike. They even provide for coverage of burial costs incase the child dies. Insurers encourage you to buy whole life insurance policy instead of term policy by highlighting the cash value which your child can take Spectrum Group of in the future. But would you and your child really benefit from such attractive offers?

Million American households have been lured into purchases such life insurance policies but we advise you to heed our warning before you join the bandwagon. You ought to weigh the worth of this risk before you buy life insurance for your child. So why do people need life insurance in the first place? The objective of an insurance policy is to protect the income of the family's wage earners so in case either of them pass away, their dependents could continue to be live comfortably. Let's find out whether babies do need Life insurance or not?

Future Insurability
It is unlikely that people in the age group of 20 to 30 would have a problem in buying life insurance. In fact those suffering with severe ailments like heart problems can get coverage from companies that specialize in high-risk insurance, of course at a much higher premium than a healthy counterpart. If you look hard enough, most conditions are insurable. Buying a life insurance policy for your infant doesn't get him or her anywhere because the face value of juvenile policies remain fairly low, at about $5,000 to $10,000. This meager amount from a jobless child will not help be of much help to the dependents thus a meaningless amount for future insurance.

Why opt for a whole life insurance policy when a term policy is good enough. Globe Life and Accident Insurance Company, are some of the largest providers of juvenile life insurance, which hold that infant policies should be specifically sold as an insurance product. Whole life insurance policies come with hidden fees and costs. Term life insurance such as a 401(k), IRA are another long-term investing vehicle which are more rewarding than spending more on a whole life insurance policy. The latter of course could come in handy as a tax savings vehicle for a large estate.

Bottom Line!!
The cost of investing in a child's insurance is much higher than the benefits gained. Most people make the mistake of buying an insurance policy for a child when they are underinsured. If you're looking to save for the child's further education, a 529 plan could prove to be more worthwhile. Not only are the savings tax-free at the federal level but could also get you an up front tax cut depending on the state you're from.

Instead parents should protect their children by getting enough life insurance for themselves.