Buying life insurance for children: 2024 rates and reviews
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BLUEPRINT
Updated 10:49 a.m. UTC Oct. 16, 2023
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Key points
- Future insurability is one reason to purchase life insurance for children.
- Some children’s life insurance policies can accumulate cash value.
- It’s important to shop around to find the best life insurance for kids.
Buying life insurance for yourself is something that might be on your to-do list. Your policy can provide financial protection for your loved ones after you die.
But what about life insurance for children? Is that something you need if you’re a parent?
Purchasing life insurance for kids could make sense if you’re worried about guaranteeing your child’s future insurability.
“I’ve seen situations where later in life children get illnesses and they’re not insurable,” said Barbara A. Pietrangelo, chair-elect at Life Happens. “If coverage is taken out at younger ages, these children still have that coverage later in life.”
Having kids’ life insurance can offer other benefits as well, but it may not make sense for every family. Understanding how children’s life insurance works and what it may cost can help you to decide whether getting coverage is worth it.
What is child life insurance?
Child life insurance is a life insurance policy that’s designed to cover a minor child. In terms of how it works, it’s not that different from life insurance for adults.
When you purchase a kids’ life insurance policy, you’re entering into a contract with the insurance company. As the policyholder, you pay premiums for a policy that protects the insured — your child.
As the policyholder, you may also be the primary beneficiary, unless you choose to name someone else. Should your child pass away while the policy is in force, the insurance company would pay out a death benefit to you.
Child life insurance policies are usually whole life insurance policies, though some term life insurance policies are available. With a whole life insurance policy, coverage lasts for the child’s lifetime, as long as the premiums are paid, locking in low rates at an early age. Purchasing a whole life insurance policy for your child will also ensure their insurability later in life, even if they eventually develop a medical condition that would make it difficult to secure coverage otherwise.
If you have a life insurance policy and don’t want to purchase whole life insurance for your child, you may be able to add a limited amount of coverage by adding a child term rider to your policy. By doing so, you’ll insure your child until they are no longer eligible for coverage, typically when they become a certain age or get married. With a child rider, you often have the option to convert the policy to permanent coverage.
Should you get life insurance for kids?
Whether or not you should get a child life insurance policy can depend on your situation.
Future insurability is often the top priority among parents who purchase a child life insurance policy. If you’re worried your child may not be able to secure a life insurance policy later because of a health issue, insuring them while they’re still young can alleviate that fear.
You may also consider life insurance for kids if you’re interested in using it as an investment vehicle, said Vincent Birardi, certified financial planner and wealth advisor at Halbert Hargrove.
Cash value is another reason some parents consider life insurance for kids. Child life insurance policies may offer a cash value component. In that case, a portion of the premium is paid into an interest-bearing account. Cash value can then be withdrawn or borrowed against later in life, while your child is alive.
For instance, Pietrangelo said she’s worked with grandparents who took out life insurance policies for their grandchildren, then allowed them to use the accumulated cash value to put money down on a home. Policies she purchased for her own children provided cash to pay for college and first cars.
How much does life insurance for children cost?
The younger your child is the more affordable life insurance coverage is likely to be, said Pietrangelo. If you’re purchasing a whole life policy the rate your child qualifies for should remain the same over time.
Here are some other considerations that can affect what you pay for kids’ life insurance:
- Coverage amount. The larger the death benefit, the more you’ll likely pay for the policy.
- Payment schedule. Some insurers offer the option to purchase a policy that is payable through a certain age, such as 100. The longer you extend the payment schedule, the lower your premium will be.
- Policy payoff. Insurance companies may also offer the option to pay off the policy within a set window, such as 10 or 20 years. The shorter the payment period, the higher your premium will be.
Monthly cost of whole life insurance for children by age
How much you pay for a child’s life insurance policy will vary by the amount of coverage you want, your child’s age and the insurer you choose.
Here are example rates of what you might pay per month to insure a child.
| COVERAGE AMOUNT | AGE 14 DAYS | AGE 5 | AGE 10 |
|---|---|---|---|
$25,000
| $13
| $15
| $18
|
$50,000
| $24
| $30
| $35
|
Source: Blueprint research. Average monthly rates are based on the three lowest online quotes for children of average weight and height for their age.
Pros and cons of buying life insurance for your child
Life insurance for children can offer both advantages and disadvantages.
Pros
Guaranteed insurability. Buying life insurance for your child while they’re young can help them avoid a scenario where they may not be able to get coverage later. That’s something you may want to plan for if you’re concerned about your child developing a health issue.
Cash value. Cash value is an added benefit of many permanent life insurance policies, including those for children. While you may be saving through other vehicles, such as a college savings account or custodial account, the cash value in the life insurance policy could provide a nice sum of money in case of an emergency.
If your child decides they don’t want to keep the policy, they could cash it out and use the funds to buy a car, pay for school or purchase a home, minus any insurer fees or outstanding loans.
Lifelong coverage. Permanent child life insurance can cover your child for their entire life, as long as the premiums are paid. Premiums remain level, meaning the policy could be just as affordable when they’re 50 as it was when they were 5.
Death benefit. Life insurance for children can provide a death benefit to parents, grandparents or other beneficiaries. If you receive the death benefit, it’s up to you to decide how to use the money. You could choose to use it to pay final expenses or any lingering medical bills if your child passed away due to illness.
Cons
Rate of return. While a child life insurance policy can accumulate cash value, the rate of return may be well below what you could get by investing the money used to pay premiums elsewhere. For example, you might get more bang for your buck by investing in target-date funds inside a 529 college savings plan.
Low coverage limits. A $50,000 life insurance policy might be enough for a young child or teen. But once they become adults, they may find that they need a much larger policy to meet their financial needs.
Limited options. Compared to adult life insurance policies, there aren’t as many options for life insurance for children. You may need to spend a little more time shopping around to find the right insurance company to work with.
Long-term commitment. When purchasing life insurance for kids, remember that the premiums need to be paid for the policy to remain in force. So you need to be committed to making those payments for years to come.
Ethos
When to get life insurance for your child
It’s better to purchase life insurance for a child when they’re young. Some insurers, for instance, may offer policies that cover your child within a few days of birth. Buying a policy sooner rather than later can help you to lock in the lowest premiums possible.
In the broader financial sense, the best time to get life insurance for a child is when you can afford to spend the money on a policy, and doing so aligns with your goals.
Most of the time, people move ahead with life insurance for children when they’re trying to build generational wealth or simply give the child a good financial start in life, said Pietrangelo.
Those are valid reasons to consider buying life insurance for your child. Ideally, you’ll never need to file a claim, but your policy can provide peace of mind.
Losing a child is extremely horrible to think about, said Birardi. However, it’s important to consider what that might mean financially if you incur unexpected costs. A life insurance policy could help to ease some of the financial burden.
Remember to consider your own situation, however. If you don’t have life insurance of your own, for example, or you have yet to start saving for retirement then you might want to prioritize funding those goals ahead of buying life insurance for your child.
It’s also wise to consider your goals, as there are other financial vehicles that may be better suited for your child. For instance, if you want to give your child a financial head start to pay for their education, a 529 plan or high-interest savings account may be more advantageous.
How do I buy a child life insurance policy?
If you’re interested in buying life insurance for your child, the first step is determining what type of coverage you need. Specifically, consider:
- Do you want temporary coverage, such as that provided through a child term rider, or permanent coverage, such as that provided by a whole life insurance policy?
- How important is it to you that the policy builds a cash value?
- What can you afford to pay in premiums?
- How much coverage do you want to have?
A good way to get an idea of what you might pay is to compare quotes from different life insurance companies, though this is difficult to do online. If you already have life insurance for yourself, you could also reach out to your current insurer to see if they offer products for children.
For instance, it’s worth looking at the possibility of adding a child rider to your term life insurance policy. “You may be able to convert child riders to permanent coverage when the term is complete,” Birardi said.
You can also check your insurance options at work. If you have group life coverage through your employer, you may be able to purchase a child insurance rider.
Remember, said Birardi, that group life plans are typically tied to your employment. If you leave your job, you may lose your coverage. Before making a move, you may want to see if your coverage is portable to a new employer.
Life insurance companies to consider
Finding the right life insurance company to work with can be time-consuming, especially if you’re not well-versed in child life insurance. To make the task easier, here are a few life insurance companies that offer coverage for kids:
When comparing life insurance companies, consider the types of policies offered, maximum coverage amounts, minimum and maximum ages for coverage and of course, the cost of premiums. Also, consider whether the insurer might require a medical exam for your child to get coverage, though they typically do not.
Frequently asked questions (FAQs)
Life insurance companies set age-based eligibility criteria for children’s policies. Generally, insurers will extend coverage once the child is a few weeks old, such as 14 days, up until they are 18, though eligibility varies.
Whole life insurance policies for children can remain in place for the child’s lifetime, as long as premiums are paid.
Child life insurance secured via a term life insurance rider will generally expire at a certain milestone, such as turning 25 or getting married. At that point, your child may be able to convert the policy to permanent coverage.
Whole life insurance policies for children are the most common and can offer lifetime coverage, along with a cash value component. Policies can pay out a death benefit if necessary and if not, children can borrow against the cash value later.
The best life insurance for kids offers the level of coverage you feel most comfortable with at a price that’s affordable for your budget.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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