Yes. Setting money aside is always wise. The problem a lot of people have is that they don't start early enough. Annuities are a good way to save for a child because the earnings can compound tax deferred over a long period of time.

If the money is going to be used for college or graduate school you need to be aware of the 10% tax that typically applies to withdrawals made before age 59 1/2 just like an IRA or 401(k). Depending on the age of the parents, it might be possible to avoid this tax by making the parents the owner of the annuity.