Should I Buy Life Insurance For My Baby?

If you have been poking around life insurance articles and advice, you probably have come across the question of whether to buy life insurance for your child. I have received a fair amount of questions about whether it is wise to buy a policy for a newborn. My unbiased opinion is that unless you know that your child has a medical problem that will make it difficult for him or her to obtain health insurance in the future, it is wiser for you to invest that money into a college savings fund such as the 529 college savings plan, a Uniform Gift to Minors Account or a Coverdell Account. Another option is to invest the money for your baby in your own name. I know there are plenty of insurance agents out there urging parents to take out life insurance policies for their child, but my honest and unbiased opinion is that there are better options.

With that said, if you do have a newborn, it is important that you and your spouse has adequate life insurance. Most agents recommend that the income earner obtain life insurance to ensure financial stability for his or her household in case of death. However, I would like to take that a step further and say that both the parents should be insured, even the one who does not generate an income. Why? Well think about that. Let’s say the wife is a homemaker and takes care of the children, cleans the house, prepares food, etc. If she dies, the husband will most likely have to hire outside help to replace her duties. This will cost him money! Although it is probably not necessary to take out a large life insurance policy for her, it is wise to at least buy a small policy just in case.