Whole Life Insurance Policies for a New Baby

Benefits

• Cash values in the whole life policy can be used by the child when the child is older to pay for a college education, a down payment on a home, to help with the purchase of his first automobile, or for any other purpose. By starting at such a young age, the cost of insurance is relatively low and the cash value can build up substantially.
  
  

Drawbacks

• Paying premiums on a whole life policy may put additional financial strain on you and your spouse. The additional premiums must be paid for the life of the child, in many cases, so you must be willing to make that additional financial commitment. Additionally, your child probably won't need life insurance for funeral costs for a very long time so you may be prematurely paying for a death benefit that's not needed.
  
  

Considerations

• Make sure that you can afford to pay premiums for at least 18 years, at which point you may be able to turn the policy over to your child. However, be prepared to pay for policy premiums for much longer until or unless your child is able to take over premium payments. Also, it is in your best interest to teach your child to be financially responsible after paying premiums for your child for all those years.