Buying a life insurance policy for your child is a personal decision. Don’t let a life insurance agent talk you into, or for that matter out of, buying a policy.

Let’s take a look at the three reasons to buy it:

1.       Death benefit – If the child dies, the policy will pay to cover a funeral.

2.       Future insurability – Take out a life insurance policy when your kids are young and if in the future they develop a chronic illness they won’t face the possibility of being denied life insurance.

3.       Savings component – Part of your life insurance premium is set aside and invested. The accumulated value can be borrowed or withdrawn at any time.

Now, let’s look at some reason’s not to buy it:

1.       Death benefit – Let’s remember the key benefit of life insurance is the death benefit.  There’s a greater chance for the breadwinner to die and that’s way more financially crippling for a family.  Most adult life insurance policies also offer a child rider.  These cost roughly $60 a year and provide a death benefit of about $10,000, enough to cover funeral and burial costs.

2.       Future insurability – With advanced technology in the medical field these days, there are now life insurance policies available for adults with chronic ailments that weren’t available 10 years ago.

3.       Savings component – Accounts get hit with fees and tend to grow slowly. A better plan would be to insure the breadwinners to the max.  Save for college with mutual funds or tax-deferred investments that can really grow.