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ASK KIM
Kids Don't Need Life Insurance
by Kimberly Lankford

My daughter's insurance agent talked her into purchasing a $50,000 life insurance policy on her healthy 5-year-old daughter. I am appalled. The agent said it was a good investment in case the child develops a disease later on and wouldn't be able to buy life insurance. The premium is $15 per month. What is your take on life insurance for children?

I'd start looking around for a new insurance agent. Very, very few children need life insurance. And the fact that it was sold as an "investment" is even more galling.

You only need life insurance if someone is depending on you financially, which doesn't sound like the case for your 5-year-old granddaughter. She may not need a policy for 20 years or more, until she has her own family who depends on her.

It's also a waste of money to buy the policy early just in case her health goes downhill later. The chances are very slim that she wouldn't be able to qualify for a policy by the time she needs one.

A better investment would be to put that $15, or more, aside for college or something else she's much more likely to use. Many states let you contribute as little as $25 to their 529 college savings plans. Check out your state plan or our best-plan picks for more details about limits and restrictions.

Most important, make sure the parents have enough life insurance -- they're the ones who really need it. You might want to point them to our life insurance planning center for tips on picking the right policy and the right amount of coverage.