This insurance product doesn't work in the traditional way as it is used more as a saving's vehicle for your child.
How does it work? It works just like any other life insurance product.
Your child receives permanent life coverage.
If he or she loses your life, the beneficiary receives a death benefit.
Since you buy whole life insurance coverage, the policy will build cash value and the child can withdraw money from the savings account to pay for coverage or in other way he or she wants.
It is easy to spot some advantages.
Many agencies advertise this type of policy as a savings vehicle.
Furthermore, your child will be covered regardless of future diseases and medical conditions.
Since the policy builds cash value, you will be able to save for your child's education.
Do you need it? No, not really.
Sure, it has many benefits and it can secure your child's future, but it is a life insurance policy! The reason you buy life coverage in the first place is to secure your dependent's financial future.
A child doesn't earn any money and he or she doesn't feed the family.
The child is the depended, the one who should receive the benefit.
From this point of view, life coverage for infants makes no sense.
Purchasing life insurance for babies means committing yourself to a lifetime of premium payments.
The rates are very small, but you will have to pay for something you do not really need.
It is highly unlikely that your child will have any problem getting a policy later in life.
A 20 or 30-year-old can get a good coverage at affordable rates.
Finally, a whole life insurance policy doesn't make a good saving's mechanism.
The rate at which the policy builds cash value is very slow and by the time your child is old enough to go to college you will not have a lot of money saved.
Certainly you can do more with a 401(k) plan and other college savings plans! In conclusion, purchasing life coverage for your infant has some advantages but all in all is an unnecessary investment and neither you nor your child gains anything.
It is better to invest the money in other saving's vehicles, because life insurance wasn't designed as a savings account!