Should I Have Life Insurance on My Children?

Dave Ramsey and his team advise against purchasing life insurance for children, particularly policies like Gerber Life that are marketed as savings or college plans. These policies often involve cash value (whole life) insurance, which is an inefficient financial product that most families don’t need. Since the likelihood of a child passing away is extremely low, any unexpected expenses in such a tragic situation can typically be covered by the parent’s emergency fund.

For those who still want some form of coverage, a child rider attached to a parent’s term life insurance policy is a more reasonable option. These riders generally cost around $50 to $60 per year and provide $10,000 to $20,000 in coverage for all children in the household. If the child later needs life insurance as an adult, they will usually have the ability to purchase their own policy, even if they develop health conditions.

Insurance companies often use fear-based marketing to suggest that a child might never qualify for coverage in the future, but this scenario is rare. Instead of spending money on a policy with minimal benefits, parents can make better financial decisions by investing in options like Education Savings Accounts (ESAs), 529 plans, or mutual funds, which provide real long-term value.