All Life Insurance Tips - is life insurance for my baby a waste of money?

is life insurance for my baby a waste of money?

I recently completed the Dave Ramsey Financial Peace University and I have been "taught" that purchasing life insurance is a waste of money and that you don't get a good return on your investment. For Christmas, my mom purchased a Gerber Life Insurance policy for my daughter. I didn't want to seem ungrateful, but is this going to be worth my mom's time and money?

Public Comments

It definetly Wilone's, it may not seem like the best Christmas present but it will help in the long run.
It depends, if your child can cash it in at any time it might not be. If he/she can cash it in, say at 18 when they go off to college and the money has been accumulated since the day your child was born it may be a huge help. If not, you could always continue saving it for the child so when they begin having their paychecks depleted for everything from bills, for mortgage to their 401K they will still have mulah incase the unthinkable happens :)
My daughter has one and the baby I'm carrying now will have one. I had a Gerber Life policy for 25 years and recently cashed it in for a good bit of money. It works almost like a savings account, but would help with funeral expenses if anything were to happen. I am pleased with them and think they are well worth it.
Once upon a time you could not insure a baby ,set up a trust fund for the baby , for her 16th birthday .
Okay, no offense, but it's kind of sad that you paid (I hope you didn't pay) same "expert" like Dave Ramsey for common sense advice and knowledge that is available for free. These people are scam artists. Life insurance for your daughter? As in, if she passes away, you receive the benefit? No, it's not a waste. God forbid she did pass away, do you have $10,000 sitting around for the funeral? It will follow her for life, and the payment is probably cheap. When she's grown, she can become owner of the policy and add it to her own term policy. That will help HER children out too.
Every insurance purchase is a gamble. The majority of people who purchase insurance waste their money: they pay far more in premium than they get back in benefits. A minority win: something bad happens and the benefit paid greatly exceeds the premium paid. And the benefit is paid at a time when it is greatly needed. This is how insurance is set up to work. Nobody has a crystal ball to tell you what your daughter's future holds. At minimum your mother has given your daughter a very nice gift that will build cash value over time. Thank her for the generous gesture.
I dont think its a bad idea
The policy is a waste of money. Children do unfortunately pass away in untimely manners, but a child-rider on your own policy (which covers ALL of your kids for one price) is a much better route to travel. Get the rider and tell your mother to buy savings bonds (or something else) and you'll likely end up in a much better position in the long run.
I wish I had a simple yes, no answer for you. I really do! There are so many reasons to buy life insurance on a child and yet about as many not to. If all one looks at is rate of return and compares life insurance to a good mutual fund, then no, the life insurance is a very bad choice. If we are looking at safety, insurability and long term coverage, then the life insurance may be a great choice. Another reason we have seen grandparents buy life insurance on a grandchild is sentimental reasons. The grandparent wants to give the grandchild a gift that will last forever or at least a very long time. So, in a sense, you are right to think of your mother's feelings when trying to decide what to do. What you may want to do is to delicately approach your mother and try to find out why she got the life insurance. If she seems open to options, then you may suggest other possibilities that may be of greater benefit to HER grandchild (the er was capitalized for a reason). If it seems that your mother's decision was purely emotional, then you may to just keep the insurance policy. It may not be the best investment, but it is not the worst by far. Please note that, if your child is a minor, you may want to make sure that an adult is the owner. You probably would be the best choice. Please see the link below for more on this subject. Be well. Philippe Deray www.mcdlife.com
Allow me to be morbid for an instant. Infants do die, and there is nothing more heartbreaking as when a parent of a deceased child has to ask for donations in which to bury the deceased child. Life insurance for infants costs very, very little and would spare you the heartbreak of asking for donations for burial. Over a period of time, the protection builds up, and the child will never be able to get insurance any cheaper. Yes, it is worth your mothers' money...
THOUGH "LIFE INSURANCE" IN REAL SENSE IS MONITORY COMPENSATION TO THE NOMINEE OR TO THE PERSON LIKELY TO LOSE THE ASSET WHAT THE POLICY HOLDER IS EXPECTED TO HAVE CONTRIBUTED OR GIVEN TO THEM IN HIS/ HER LIFE TIME, INSURING CHILDREN SHALL BE AN ASSET CREATING EXERCISE TO FULFILL THE NEEDS AT A PRE-DECIDED TIME OF THE CHILD'S LIFE, LIKE HIGHER EDUCATION OR MARRIAGE ETC. INSURANCE CONTRACTS ARE ALEATORY, i.e THE RETURNS MAY BE MORE THAN WHAT YOU HAVE PAID OR MAY BE LESS. GIVEN YOUR EDUCATIONAL BACKGROUND, I FEEL THIS QUESTION BY YOU IS MORE TO TEST OTHER'S KNOWLEDGE THAN TO KNOW REALLY THE UNKNOWN. CORRECT ME IF I AM WRONG. V BALAJI
It will not be worth her money. I do not know how much time she spend, so I cannot say if it will be worth her time.
What the hell is Dave Ramsey University? If the Gerber LIfe premiums are cheap you wont lose too much on the deal but you have to keep up the monthly payments for years and years.
Well, you're absolutely correct, the "return on your investment" for child life insurance, is usually ZERO. Life insurance is a DEATH planning tool. When you "run the numbers", you'll find out that Gerber is the absolutely most expensive way to buy the littlest coverage that you'll most likely NEVER use. If you WANT child life insurance, get a rider on YOUR life insurance policy for your child. Me, I'm an insurance agent, mom to three kids, and NONE of my kids have life insurance. If God Forbid one of them dies, I can pay for the funeral, because I haven't wasted my money on Gerber for the past two decades. Dave would be proud of me.
Life insurance is not an investment as such but is a gift of life. You buy life insurance so someone can be protected if the insured person dies. What might have been a better gift is life insurance on the mother for the benefit of the infant with the grandmother being the trustee for the child
Life Insurance usually means that it cannot be cashed at any time during that person's life. It is meant to cover funerals expenses and such like. It might be a good idea for you to read exactly what the policy says. If your mum paid a one-off payment for this which will pay for your daughter's funeral regardless of how long she lives and regardless of what the funeral costs when that time arrives then the deed is done. You have it and, providing the firm doesn't go bankrupt no-one else will ever have to pay for the funeral. However, if it is something that your mother is paying in to regularly it means that, when she is gone, you'll have to take over the payments. If that's the case it might be worth cutting your losses, cancelling the policy and taking out a different type which could be cashed for a lump sum when needed e.g. university fees, marriage expenses etc. If in doubt, ask someone who knows about these things to give you some sound advice.