M.O.
D.,
Our life insurance agent and our financial advisor each recommended NOT doing this. Their logic, put away the money some other way for a rainy day. This way there's not ANOTHER bill to pay, you can use the money in a family emergency if necessary and you can decide how to invest the money yourself without the fees and penalties associated with a policy.
This advice was based on the fact that we have healthy children, my husband and I are both relatively healthy (read no known risks to childhood related illnesses in our family) and we have some savings/retirement and life insurance for ourselves already.
With that said, our agents, each, separately said, listen, if there's not a risk of your child dying or concern for health issues, then IF the worse did happen, you have cash to pay for a funeral, and that's all you really need for a kid.
Since we already have life insurance for ourselves, and savings/retirement money started, both suggested following the same "payment schedule" you would if you were to buy a life insurance policy for your child. Say $20/mo. (just picking a #). Be disciplined. Every month, put that money into a savings account. Every $100 or so, move that money into a c.d. or stock. Do this for EACH CHILD.
Then, IF something happens to a child, you already have a "life insurance policy" of your own making to draw from. If you never need to touch that money, then you can eventually use it for college, weddings or a trip to the Caribbean for you and your hubby after all the girls move out!
All this, without someone else taking a cut, laying on fees, or the risk of losing your investment if there's a family emergency and you are unable to make payments into a real life insurance policy you've committed to.
BTW - my mom had one of these "policies" for each my brother and I growing up. She said it took A LOT of discipline to make the payments each month. There were some lean times were making those payments was really difficult. When we were each grown, she presented the policies to us and said, here, do what you want. If you want to cash it out, it's all yours. She also said in hindsight it probably wasn't the best way to spend their money when we were growing up.
Best of luck!
Sara