We all know how important it is to have life insurance, but it’s a much more emotional decision to make when it comes to children, especially if they’re young. Here are some factors to help you decide.

Life and Critical Insurance for children: protecting you and them.

Guarantee your children’s insurability. By taking out children’s life insurance early when they are in good health, you’re giving them protection that will stay with them for life. It also locks in the child’s insurance premium based on the attained age. This can be a huge advantage for your children, especially if their health declines.

Create an additional stream of income. A participating whole life insurance policy provides an annual dividend to its policyholder. This allows you to create an extra source of passive income for the child.

Accumulate assets and access to cash. Participating life insurance policies include a savings component, called cash value. Funds in this participating account grow on a tax-deferred basis. You can withdraw from or borrow against your policy’s cash value at any time and use the money for any purpose. For example:

• Pursuing higher education
• Planning a wedding
• Starting a business

The advantages of taking out children’s life insurance.

• Premiums are lower due to children’s young age and good health
• Your children could enjoy life insurance they won’t have to pay for all their lives.
• Their insurability will be maintained if they decide to keep their insurance when they are adults. They can choose term, permanent or universal life insurance.
• Some insurance policies, such as critical illness; disability insurance, allow you to add more coverage
• If your child were to die, you would have financial protection that would enable you to take the time you need.

The disadvantages of taking out children’s life insurance.

• A participating whole life policy costs more than a comparable non-participating policy. And compared to term insurance, participating life insurance is significantly more expensive. Expect to pay anywhere from five to 15 times more.
• The rate of return on a policy fluctuates. It depends on the insurer’s performance.