@Tom Thank you for the great topic and conversation. The problems with the savings policies you mention is probably not the policy but the person selling it to you. Permanent policies have a ton of funding flexibility. Most people don’t realize this and it’s the funding that gives the policy most of it’s performance.
Evolution Of Wealth´s last blog ..Guaranteed Not To Happen

For example, a young person diagnosed with cancer, who may already be married, with a young family but did not purchase insurance yet, or a young person who needed an organ transplant. Either would not qualify for life insurance, or it would be too high to justify. Even a small policy covering just a small payout would be something for the future family should anything ever happen. Heaven forbid, of course.

We’ll take out a small policy on our future child only for these reasons.
CanadianDebtGirl´s last blog ..Student Loan Debt in Ontario

A cheap term life product would be an improvement. So far all I’ve had thrown at me have been policies that push a savings aspect. Unfortunately as savings vehicles, most of these are even worse than many of the high MER mutual funds I’ve ditched in the past.

You make some good points about future premiums that I didn’t fully cover. It may still come back to what you do with the money saved by not paying the premiums. If it’s actually being saved, then you could have a somewhat-predictable amount saved by the time the child is an adult. This could outweigh any increased premiums that need to be paid.

It certainly depends on the situation that each person finds themselves in. If something where to happen to my child, having the payout would be very beneficial. I however prefer to focus on insuring against financial catastrophes that I couldn’t otherwise afford to cover, like my house burning down or something happening to me and my ability to pay the bills.

My parents did this for my brother and I. A few months later, my brother was diagnosed with Type 1 diabetes and would be insurable. So a good more there.

For me, my premiums are much less than what we pay for my husband (who did not have life insurance) when we took out a policy on him when we got married at 21 and 22.

My parents decision when I was 12 has paid huge dividends to us in terms of life insurance security as we get older. So maybe you won’t benefit from the life insurance payout as parents, but your child in-law(s) and grandchildren may.