Several forms of life insurance exist for children. One of the options with the most benefits, regardless if the policy is paid out in the event of a child’s death, is child whole life insurance.

Childhood death is obviously emotionally draining, but finances tend to take a hit as well. The death of a child can cost the family up to $10,000 in funeral expenses, grief counseling, etc. Additionally, parents may choose to use funds from the insurance policy payout to establish a charity foundation in memory of their child.

Whole life insurance policies are normally purchased to provide the child with an investment opportunity in addition to funds for expenses the family may incur in the event of that child’s death. If parents chooses to buy whole life insurance for their child, it is best to do so early on in the child’s life. Doing so will enable lower monthly costs.

Children covered by whole life insurance are covered for their entire lives and the premiums remain at a fixed rate. In addition to the insurance policy, whole life also offers a savings account that accrues value as the insurance company invests a percentage of client premiums. Policy value begins accruing steadily at the end of the third year of the policy. Another benefit, aside from the insurance value, is the investment is tax-deferred. A tax-deferred investment is one in which some or all taxes are not applied until the policy is cashed in, rather than as funds appreciate.

Whether a whole life insurance policy is appropriate for a family needs to be evaluated case by case. Financial advisors may recommend alternate investment opportunities that will turn a better profit for the child and family. Alternate investment may be particularly attractive because there are no insurance premiums to be paid.