S/O life insurance - what to do with a child policy?

[fashionx]

I have read and heard that having child policies are pointless and not good investments. I did not get one for my DD. But, my mom told me she had one for me, started when I was a baby. She recently this summer signed it over to me to either cash out or continue to pay, although seemed slightly disappointed when I mentioned cashing it out, saying it would be good for me to keep paying it "just in case".

I haven't had time to find out the cash value, but the death benefit is only $5k, so I can't imagine much. I think it's $75 per year to keep it going. Is there a good reason either way?

[SJ]

Do you have life insurance of your own at this point?

If not, is there any reason you would be difficult to insure? Sometimes you can add to the child policies without getting a new medical qualification. I think protecting insurability is one of the best reasons to get a child policy.

Does the policy require that you continue to pay? If you already have life insurance, etc., then I would probably lean towards cashing this one out.

[cjeanette]

$75 a year for a 5k death benefit? No. Cash it out.

[Deleted]

We cashed out my husbands and bought a new car. He has plenty of term life insurance so didn't think we needed it.

[Deleted]

Oh yeah for 5k, I would cash out for sure.

[fashionx]

Aug 19, 2016 13:08:02 GMT -5 SJ said:

Do you have life insurance of your own at this point?

If not, is there any reason you would be difficult to insure? Sometimes you can add to the child policies without getting a new medical qualification. I think protecting insurability is one of the best reasons to get a child policy.

Does the policy require that you continue to pay? If you already have life insurance, etc., then I would probably lean towards cashing this one out.

I don't have another policy, but I also don't have any reason medically why I couldn't be. I've been talking to DH about getting term insurance instead now that DD is around, and have a house etc.

If I keep it I would have to keep paying.

So sounds like I should just cash it out.

[SJ]

Yeah cash it out & buy your own term policy.

[AmyRI]

We have policies for each of our kids. We got them because SIL had a brain tumor as a child and is uninsurable because of it, and we want the kids to have SOMEthing available to them as adults if a similar situation happened to any of them. We have policies that double automatically for no increased premiums when they hit age 18, with a guarantee that they can buy more without medically qualifying. We pay about $100/year for each kid for a $20k policy. I sure hope it's wasted money.

I fully expect that the kids will cash them out once they secure their own term policies as adults. In your situation, I would get an appropriate term policy (or even just whatever term policy you can get for the same $75/yr) and cash out the one you have now.

[Deleted]

get a new policy and then cash out!

[spk926]

I would increase your life insurance amount. Talk to someone to see if it's cheaper to add on to your current policy or start a new one. It's most likely cheaper to start a new one as a child's policy is defaulted to a smoker and not a high health level. But you never know.

Having a policy for a child is something I don't think is pointless. We have purchased them for our kids and myself and all siblings, along with other family members have them too. A family member has a history of addiction and is now in recovery. Because of their addiction they aren't able to buy life insurance BUT because of the policy started for them as a child they have some. They added onto the policy that was purchased when they were 6 years old.

[froggy76]

I also have a policy for $5k that my parents bought for me as a child. The annual premium is something like $40/yr and my dad told me to make sure I keep paying it. I'm now insured for over $2M so I just don't see the point. The cash value was only a few hundred so I just stopped paying premiums a few years ago and I'm letting it run out.

[emoflamingo]

I would cash that out and buy something term to replace it. But I agree with spk926 that kid policies aren't pointless. I have policies on each of my kids that would cover burial and some medical costs if something were to happen. Better safe than sorry.