Arizona Life and Health Practice Exam

Which of these is not a reason for purchasing life insurance on a child's life?

1. Provide benefits for the child if the parents die

2. Lock in insurability at an early age

3. Build cash value for future expenses

4. Provide a financial safety net for education costs

The correct answer is: Provide benefits for the child if the parents die

The correct answer identifies a rationale that does not align with the typical reasons for purchasing life insurance on a child's life. Life insurance for children primarily serves different purposes compared to adult policies. When considering the unique reasons parents might purchase life insurance for their children, locking in insurability at an early age is a significant benefit. This allows the child to have guaranteed insurance coverage that can't be taken away in the future, regardless of health changes. Additionally, building cash value for future expenses is a key feature of whole life policies, making it advantageous for families looking to save for future costs, such as education or other important milestones. Providing a financial safety net specifically for education costs is another valid reason families might consider a policy, as it can ensure that funds are available for their child’s future. In contrast, purchasing life insurance on a child's life primarily does not function to provide benefits for parents in the event of their death. The purpose of insuring a child typically revolves around securing their future and financial aspects related to them, rather than benefits that pertain to the parents' circumstances.