How would an agent demonstrate the value of buying whole life insurance for a child? At first glance, there appear to be lots of better alternatives, like a savings account. While a whole life policy would accumulate some cash value over time, only a small amount of the premium would contribute to the cash valued portion of the policy, and the policy only adds the monthly average interest once per year.
Agents agreed that the main selling point of the policy was guaranteed insurability later in life if the child’s health declines. Most agents would rather see a parent invest in life insurance for THEMSELVES so that the child would benefit in the event of a parental death. But agents noted that these plans have great value after the parents insurance programs have been shored up.
They both preserve insurability and once of age, the child can take over payments and ultimately ownership which is a good basis for teaching systematic savings in a safe environment. As for cost, the insurance costs built in are WAY less than an adult because the insuring company is expecting an “mortgage” payment for 70 or 80 years. See more of the discussion right here.