Why you don’t need life insurance for your kids

Buying life insurance for kids is one of the big mistakes people make when it comes to their finances. Here’s the simple reason they don’t need it: they’re kids!

One of the biggest reasons you buy life insurance is to replace income in case you aren’t around to produce it, especially if people you are responsible for depend on your income. So, unless your kid is a teen pop star, you don’t need life insurance for your children because they don’t have to worry about income replacement or estate tax issues. They’re out there being kids. They aren’t earning a significant amount of money, so they don’t need life insurance.

Insurance companies may try to sell you coverage as a way to save money for the little ones. Saving money for your kids is important, but life insurance will have high administrative costs and undesirable investment options. There are better options to save and invest for your children.

We caution against spending money on child life policies because there are better ways to protect children financially. A smarter financial move than buying life insurance is to stash money into an emergency fund, which could be tapped for any type of crisis.

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