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You may need life insurance after getting married or having a child, but do you need it from the day you're born? Advocates of juvenile life insurance say "yes" and hail the policies as financial planning essentials, while critics argue they're a waste of money.

Just like grown-up life insurance, two types of policies are available for kids: juvenile term insurance, which provides coverage until age 23 or 25 and offers the family a death benefit to cover unexpected funeral expenses for the child; and juvenile permanent insurance, which includes both a death benefit and a savings reserve that builds "cash value" as the child ages. Here's what a family needs to know.

Child death benefit pros and cons

Companies offering juvenile term life insurance talk about how the policies can provide a family with "peace of mind" by offering financial assistance -- namely, a death benefit -- "if the worst were to happen" to the child.

Juvenile term policies are sold on the idea that the death benefit is not designed to replace income, as it would be for an adult, but instead is geared toward covering burial and funeral costs if a child passes away.

Pros: Funerals are expensive. According to the most recent survey by the National Funeral Directors Association, the average cost is about $4,300, and that doesn't even include casket and cemetery expenses.

Cons: Chances are remote that a parent would ever need to pay for a child's funeral. The U.S. Department of Health and Human Services estimates that only 0.03 percent of U.S. children die between the ages of 1 and 4. And then, for children ages 5 through 14, that mortality rate drops by about half.

Since the death of a child is so unlikely, purchasing juvenile life insurance strictly to cover potential funeral costs is "very short-term thinking," says J. Robert Hunter, director of insurance for the Consumer Federation of America, a nonprofit consumer advocacy group based in Washington, D.C.

If families are concerned about covering unexpected funeral costs, Hunter says, they'd be better off creating a college savings fund and pulling from that if needed, rather than purchasing a juvenile life insurance policy.

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Posted 12:30 PM  View Comments


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