Guides
Should you buy life insurance for a child?
Most families do not need a separate policy on a child. When a child term rider, a juvenile whole life policy or nothing makes sense, and what each costs.
For most families the answer is no, or "not yet." Life insurance replaces income that a family loses when someone who earns or provides care dies, and a young child usually does neither. Your first dollars belong on coverage for the parents. A policy on a child can still make sense for specific reasons: to cover funeral costs, to lock in future insurability when a family history of illness runs deep, or to give a grandchild or young adult a financial head start.
The case against insuring a child
Parents' coverage protects the child. If a parent dies, the child loses financial support and care; if the child dies, the family loses someone it loves but not income. That is why financial planners generally put adult coverage first, and why a policy on a child, especially an expensive permanent one, can compete with money better spent on the parents' term coverage, retirement and college savings. life insurance for new parents covers the parents' side.
Premiums on a child's policy are low in the early years because children are statistically very healthy, but a permanent policy costs far more than a rider or term policy and builds cash value slowly at first. Compare against alternatives such as a 529 plan or a custodial account, which are designed for savings goals.
Reasons families do buy
- Funeral and final expenses. The NFDA's 2023 General Price List Study found a median funeral with viewing and burial of $8,300 (cremation with viewing $6,280); see what a funeral costs and how families pay for it. A small policy or a rider can cover that; it is the most direct need.
- Locking in insurability. Buying a permanent policy, or one with a guaranteed insurability option, can protect a child who develops a condition later from being uninsurable. This matters most when a serious condition runs in the family. See guaranteed insurability riders: buying more coverage later and how family medical history affects life insurance.
- Lower lifetime cost. Rates are based on age at issue, so a policy bought in childhood has a lower premium than the same policy bought at 30. The total cost over a lifetime is not always lower, since you pay for more years.
- A cash-value gift. Some parents and grandparents use permanent coverage as a long-term savings vehicle. Its returns are modest early on; see whole life insurance for children: pros and cons for the numbers to ask about.
- Income lost for care. If a parent would take unpaid leave after a child's death, some families want a cushion. That need is real but small compared with the parents' coverage.
Your options
| Option | What it is | Fits when | Watch for |
|---|---|---|---|
| child term riders: coverage, conversion and alternatives | A small amount of term coverage on all your children, added to your policy | You want funeral money for several children at low cost | Amount is small and set by the insurer; check that it can be converted to permanent coverage later without a medical exam |
| Juvenile whole life | A permanent policy owned by a parent or grandparent | You want a lifetime policy and guaranteed insurability | High cost for the death benefit; limited early cash value |
| Juvenile term | Term coverage on the child, where an insurer offers it | You want temporary coverage only | Availability and amounts vary |
| Guaranteed insurability on a parent's policy | A rider letting you buy added coverage later without new exams | You want to protect the parent's insurability | Priced into the premium |
| Savings account or 529 | Not insurance | You want flexibility for college or other goals | Does not guarantee insurability |
Rider terms vary by insurer: each sets the youngest and oldest age covered, and many riders can be converted to a separate permanent policy of several times the rider amount at a stated age without a health review. Not every insurer's terms match, so ask for the specifics. See child term riders: coverage, conversion and alternatives.
How policies on children work
- A parent or grandparent owns it. The child is the insured; the owner pays premiums and controls the policy until it is transferred. The owner needs insurable interest: who can buy life insurance on whom, which a parent or grandparent has.
- Benefit limits. Insurers often limit the death benefit on a child to a fraction of the parents' coverage, because a child's death is not an economic loss in the way an adult's is.
- Transfer at adulthood. Owners usually transfer the policy to the child at 18 or 21 or as an adult; read the policy for the process. See transferring ownership of a life insurance policy.
- Beneficiary. Name the owner or the parents; a minor cannot receive proceeds directly, as naming a minor child as life insurance beneficiary explains.
- Cash value. If the policy is permanent, the child can later borrow or withdraw the cash value; see whole life cash value: how it grows and how to use it.
What to do
- Insure the parents first; see How much life insurance do I need?.
- Decide whether a small amount of funeral coverage is worth a few dollars a month; a rider is the simplest way.
- If you have a strong family history of illness, ask an agent about guaranteed insurability and compare permanent coverage and its cost over 20 and 40 years.
- If you are a grandparent considering a gift, see life insurance for grandchildren.
- Skip door-to-door or mail offers for "child coverage" that promise savings; compare any proposal with its guaranteed cash value, not illustrations. See guaranteed vs non-guaranteed values in a policy illustration.
Key takeaways
- A young child does not provide income, so insure the parents before the child.
- A child term rider is the simplest low-cost way to pay for a child's funeral expenses.
- Permanent policies on children can lock in insurability and a low rate but cost much more for the death benefit.
- Ask whether a rider converts to permanent coverage without a health review, and at what age.
- Compare any child policy against a 529 plan or a custodial account for savings goals.