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Life Insurance for Children: Is It Worth Buying?
By Joan Pabón MONEY RESEARCH COLLECTIVE
Buying life insurance on a child isn’t for everyone, but it can make sense in certain situations. A child life insurance policy can financially assist parents in the aftermath of a loss by covering funeral expenses and replacing their lost wages if they can’t return to work immediately.
Purchasing a policy for a child can also guarantee their future insurability and — in the case of whole life insurance — provide them with access to a cash value component from which they can borrow later in life.
Buying life insurance for a child isn’t an option most parents want to consider, but it’s certainly worth evaluating carefully.
In this article, you’ll find more details about how life insurance for children works. We also cover the potential benefits and drawbacks of taking out a policy on a minor’s life, and recommendations on how and where to buy coverage.
Table of contents
- What is life insurance for children?
- What does life insurance for children offer?
- What does child life insurance cover?
- What are the different types of life insurance for children?
- How much does life insurance for children cost?
- What are the best companies selling life insurance for children?
- How to choose the right life insurance for children
- Is life insurance for children worth it?
- Life insurance for children FAQs
- Summary of our guide to life insurance for children
What is life insurance for children?
Children cannot receive life insurance payouts, at least not directly. If you name a minor as your life insurance beneficiary, the death benefit will be held for them while someone is appointed to manage the funds on their behalf until they come of age.
So, when we talk about life insurance for children, we’re talking about a policy taken out on a child’s life. In the event of the child’s death, the policy would pay out a death benefit to the parent, grandparent or legal guardian who purchased it.
Life insurance coverage for children can be bought soon after the child is born — as early as 14 days or younger. Some policies issue new policies for children up to age 14, but some cover kids up to 18.
You can get coverage to an older age by adding your child to your own life insurance policy. Coverage could then last until the child turns 25 or you turn 65, whichever comes first.
Coverage amounts for child life insurance are generally lower than for adult policies, ranging from $5,000 to $100,000. Most life insurance companies also require the parent or guardian to have just as much or even twice as much coverage on their own lives — regardless of the type of policy.
What does life insurance for children offer?
There are a couple of different reasons why a parent may want to get life insurance coverage for their child.
1. Financial protection against the loss of a child
In some cases, parents of children with disabilities, serious health issues or an adverse family health history may opt to buy coverage in case the worst were to happen.
As anyone who has experienced a major loss will know, the death of a loved one can be emotionally devastating. That, in turn, can lead to financial hardship from one or both parents being unable to work, at least for a time. With that in mind, life insurance could help cover funeral expenses and even lost wages for grieving parents.
2. A guarantee of the child’s future insurability
Another reason to get a life insurance policy on a minor is to guarantee their future insurability.
If the child grows up to develop any kind of health condition or have a high-risk profession or hobbies — which could make purchasing life insurance harder or more expensive — they would already have a policy. Moreover, depending on the insurer, they could buy additional coverage without undergoing a medical examination.
Note, however, that term life insurance premiums for a healthy 25-year-old non-smoker can be very affordable (less than $30 a month for a 20-year $500,000 policy). You don’t necessarily have to worry about future insurability, then, if there isn’t a history of severe or chronic illness in your family.
3. An investment the child can tap later
Some view getting life insurance on their children as an investment. Whole life insurance policies — the only stand-alone policies available for children — have a cash value component from which the policyholder can borrow.
When the minor child comes of age and the whole-life policy is transferred under their name, they will be able to tap into that cash by borrowing against the policy. Borrowing from the cash value of an insurance policy has fewer restrictions than borrowing from an IRA or 529 plan.
Nevertheless, whole life insurance is generally more expensive than term life. Moreover, according to Consumer Reports, the average annual rate of return on a whole life policy’s cash value ranges between 1.5% and 3.5% – which might be lower than the return on alternative investments.
If you’re considering life insurance as an investment, whether for you or your child, you may want to consider other options. Consult a financial advisor for more information.
Pros and cons of life insurance for children
- No medical exam required
- Death benefit can cover funeral expenses and a parent's lost wages
- Stand-alone whole life coverage has a cash value component
- Can guarantee your child's future insurability
- The likelihood of a child dying is low
- Costs can add up over time
- The cash value component has a low rate of return
- Premiums could be invested in other instruments with higher returns
What does child life insurance cover?
Child life insurance policies cover the life of a minor dependent. In the event of the child’s death, the policy would pay out a death benefit equal to the policy’s face value — typically $10,000 to $100,000.
As the only stand-alone policies available for children are whole life ones, the policies also contain a cash value savings component from which the child can borrow when they come of age.
| What’s covered | What’s not covered |
| A death benefit that can range from $10,000 to $100,000 | The parent or guardian’s life (and parents must have just as much or even 2x more coverage on themselves) |
| A cash value component the child can borrow from in adulthood | The cash value payout upon the child’s death — cash value components are not payable to the beneficiaries |
What are the different types of life insurance for children?
There are limited life insurance options for children. Most life insurance companies offer only whole life coverage for minors. That option can be more expensive — up to twice as much — than adding a child to an adult’s life insurance policy.
Term life insurance
This type of policy pays out the coverage amount as a death benefit to the policy’s beneficiaries if the insured person dies within the policy term (typically 10 to 30 years). If the insured outlives the policy term, the coverage simply expires.
Term life insurance policies can be an incredibly affordable option for healthy adults. A 20-year term policy for a 25-year-old non-smoker can cost under $30 a month for $500,000 in coverage and around $45 a month for up to $1 million.
However, insurance companies don’t offer term life coverage for children. Instead, the adult may purchase insurance on their own life (whether term or permanent) and add the child to their coverage through a child life insurance rider.
A child rider can be much more affordable than a whole life insurance policy. While actual costs will depend on the coverage amount you select, most sources cite annual averages of $4 to $7 for every $1,000 in coverage. Moreover, some life insurance companies offer the option to convert the child life rider into a stand-alone permanent life insurance policy when the minor becomes an adult.
Whole life insurance
Whole life insurance is a type of permanent life insurance policy that remains in place for the insured’s entire life, as long as the policyholder keeps up with premium payments. Besides paying out a death benefit, these policies contain a savings component, called the cash value, from which the policyholder can borrow.
When you buy children’s whole life insurance, you are the owner of the policy until the child reaches adulthood and can assume ownership (some companies allow you to decide when that is).
But while whole life policies for adults can cost up to 15 times more than their term life counterparts, child life insurance policies can be much more affordable because coverage amounts tend to be lower — between $5,000 and $100,000.
In turn, the cost of child policies is also lower – especially if you start young. Insuring your child at an early age is the best way to save on premiums. For example, a generous $50,000 policy for a four-year-old boy can cost under $45 per month, while the same coverage for a 14-year-old can cost $64 per month.
How much life insurance do you need for your child?
The right amount of coverage to purchase on your child’s life will depend on how you plan to use the policy.
A couple looking to replace between three to six months of income, plus cover funeral expenses, in the event of their child’s death may opt for a $50,000 policy. But a parent wanting to invest in their child’s future may opt to purchase the highest level of coverage available.
Keep in mind, however, that whole life insurance policies for kids tend to feature lower death benefits than term-life ones. Most insurers offer as little as $5,000 and as much as $100,000 in coverage.
How much does life insurance for children cost?
Life insurance for kids can cost as little as $3 per month. The actual premium will depend on the insurer and coverage amount you choose, along with the child’s age, gender and health. In the example above, a $50,000 policy for a healthy four-year-old boy could cost under $35 per month.
Stand-alone whole life policies cost more than adding a child rider to an adult’s life insurance policy. A child rider can cost around $5 per year for every $1,000 in coverage. This means you’d pay $250 per year for $50,000 in coverage — just $20 per month.
What are the best companies selling life insurance for children?
The following are some of the leading life insurance companies that offer whole life insurance policies for children.
| Insurance company | Available coverage amounts | Insurable age | Number of children under one policy | Average monthly premiums |
| Gerber Life Grow-Up Plan | $5,000-$50,000 | 0-14 years | Up to six | $38-$64* |
| Mutual of Omaha | $5,000-$50,000 | 14 days to 17 years | N/A | Varies by age, health and coverage amount |
| Foresters Financial | $5,000-$75,000 | Under 18 | Up to six | Varies by age, health and coverage amount |
| Aflac | $50,000** | 14 days to 17 years | N/A | Varies by age, health and coverage amount |
*Monthly premiums reflect a children’s whole life policy for a healthy male child residing in the state of Florida. Actual premiums will depend on the level of coverage selected and the child’s age and health.
**Coverage amount varies by state.
How to choose the right life insurance for children
To choose the right life insurance for a child, consider first why you are purchasing the coverage.
If you have your own policy, and are looking only for a measure of financial protection against the death of your child, you may not need a policy in their name. Adding a child life rider to your life insurance policy could be the best and most affordable option.
A stand-alone policy makes more sense if you’re looking at life insurance as an investment. You might, for example, want your kid to have access to that cash value as part of, say, their college savings. A whole life insurance policy will be costlier than buying a term one, but it may better meet your needs.
As for choosing an insurer, there aren’t as many companies offering life insurance for children. It’s much more common for insurance companies to offer child life riders. Nevertheless, as with your own adult policy, it can pay to shop around and compare life insurance quotes and plan details. That better ensures you’ll get the type of coverage you want at a price you can comfortably afford.
If you’re looking for a life insurance plan as income replacement, calculate how much coverage you would need to cover funeral expenses and replace your gross monthly income for three to six months. Up to a half-year of income replacement can give you space to process your loss on your own time.
If you’re a high-income earner, however, you might not be able to replace that much income with a policy. Coverage amounts typically don’t exceed $100,000.
Is life insurance for children worth buying?
You can’t put a timeframe on grief, but does life insurance for children make financial sense?
Buying life insurance is worthwhile in specific scenarios and for particular purposes.
That starts with wanting the peace of mind that comes with knowing you’d be able to cover funeral expenses and lost wages if the worst were to happen. If such assurance is a high priority for you, buying life insurance on your child’s life can be a good investment.
On the other hand, don’t purchase a life insurance policy only for your child to access the cash value component later in life. Other financial vehicles can offer you a higher return on a long-term investment.
Similarly, parents concerned about their children’s future insurability should consider their family health history when deciding to buy a policy. Term life insurance premiums for younger adults in perfect health and who practice healthy habits can be very affordable, costing around $30 a month for a $500,000, 20-year term policy.
Ultimately, the decision comes down to the value you place on peace of mind, and on your budget. Most life insurance policies for children cost between $20 and $64 a month. If you’re financially stable and comfortably afford that, then a child life policy may be for you.
Life insurance for children FAQs
How can I get a free quote on children's life insurance?
Contact any of the companies we list in the section above, or do your own research. Some life insurance companies that offer whole life insurance for children have online quote tools that can provide you with estimated life insurance rates.
Companies that don't have online quote tools can still offer free quotes over the phone. You simply need to provide the insurance agent with a few details about the child you want to insure and your relationship with them.
How does life insurance for kids with diabetes work?
According to Diabetes Life Solutions, many life insurers will not cover a child already diagnosed with diabetes until they are 18 or older. Companies that cover children with type 1 diabetes will do so for higher premiums, as the child will be considered high risk.
Can I buy life insurance for my children as soon as they are born?
According to Progressive, you can buy life insurance for a child as soon as they are born or even before, but some plans require the child to be at least two weeks old.
How long does life insurance last for children?
The length of the policy will depend on the type of policy and the particulars of the life insurance plan you purchase. Whole life insurance remains in place for the life of the insured. When your child comes of age, you can transfer the policy to them so they can continue making payments and name their own beneficiaries.
If you purchase coverage for your kids through a child life insurance rider, then that coverage typically remains in place until the child is grown, which some plans may determine is age 18 or up to age 25. Upon reaching the age of maturity as listed in the plan details, the coverage expires. Some companies, however, allow the young adult to convert the child rider into a whole life insurance policy of their own.
What is the best age to buy life insurance for children?
If you've already decided on life insurance for your child, it may be best to purchase a policy as soon as possible. As is the case with life insurance for adults, child life insurance premiums increase as the child ages. By age 14, a whole life policy for your kids can cost around $64 per month. Moreover, buying a policy early in the child's life will allow for greater cash value growth.
Summary of our guide to life insurance for children
Life insurance for children makes the most sense if you’re worried about the possibility of your child developing health issues in the future or just want to gift them a whole life insurance policy at a young age as part of their college fund.
There are options for such parents. Be aware, though, that the choices available to you will depend on your motives for purchasing coverage in the first place. And costs will vary depending on the type and level of coverage you choose.
Many life insurance companies require adults to have just as much (sometimes more) coverage on their own lives before they can buy a relatively large child life insurance policy. If you don’t already have life insurance, check out our top picks for the best life insurance companies of the year.
Joan is a professional translator, writer and editor with a special interest in personal finance and insurance topics. She has been a contributing author and independent researcher at ConsumersAdvocate.org since 2017 and an editor at Money since 2019. Her work has been featured in MSN Money and Apple News.