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Does My Child Need Life Insurance?

By Byron Udell | May 9, 2017

Having a life insurance for your child could pay dividends in the long term. To find out more, read on.

[Editor’s Note: This blog was originally published on August 24, 2006. The content has been updated.]

For many of you out there, life insurance for children may be an unthinkable option.

My children aren’t earning, why should they be covered under life insurance?

Insuring kids is a waste. Put your hard earned money in something else!

And yet, many families across the country choose to buy some form of child life insurance to supplement their family insurance portfolios. There are some clear reasons why a life policy on children is deemed a wise investment and even a necessity for some families, despite the negative connotations it carries.

The video below gives a brief overview of the benefits of child whole life insurance:

Here are some quick reasons why having child life insurance is so important:

  1. For those families that have a history of health conditions, this is reason enough to seek life insurance protection for your child. If you suspect that your child could have trouble finding life insurance later on as an adult because of a possible condition that would render him (or her) uninsurable, having life insurance as a child can help safeguard against that possibility. How? Since all individual life policies on children are whole life policies, they last for as long as your child is alive, and don’t run out like term life insurance. They can be increased in face value once your child turns 19, to pay out a larger death benefit, without having to go through an additional medical examination.
  2. Many stories have surfaced regarding families who have spent months after the death of a child in fundraising activities to pay funeral bills, instead of grieving and coming to terms with their loss. And if you’re dealing with a large hospital bill, this could quickly eat into your savings, making the loss not just an emotional one, but also a financial disaster as well. A low-cost funeral is at least $10,000 these days. Do you have this amount stowed away for such an unforeseen event? An alternative, affordable option is to get a child rider on your existing term life insurance policies. Child riders are cheap, costing as little as a couple of dollars every month to cover a small death benefit that can easily pay off funeral bills. Some policies allow these riders to be converted into whole life policies at the age 19, without a medical examination, as a hedge against future uninsurability.
  3. Whole life insurance on children can also be used to help save for expenses like college tuition. We recommend this to families in upper income brackets that are looking for an alternative savings vehicle, that provides a slower rate of growth, but resides in a safer financial account. (When you buy whole life policies for children, make sure to think of them as permanent death benefits first, and as investments later.) You can borrow from this policy and pay it back at internal interest rates. (Note: Borrowing from the policy could reduce its final death benefit.) Parents and grandparents also like gifting these type of policies when the child comes of age, by which time the policy would be paid up, if left untouched, for its entire duration. You can choose to gift your policy to your child at 19 years of age, but they cannot expect or demand the money. Since you paid into it for all those years and you are the owner, you get to hold on to it if you think it necessary.
  4. An important thing to remember is that the parents need to be covered under adequate life insurance policies themselves in order to get any life insurance for their children. You shouldn’t be thinking about a policy for a child if you don’t have one to protect your family, if something happened to you.

For more help and information, look up child life insurance quotes online or talk to us at AccuQuote about which option is a better fit for you. With the help of a life insurance needs analysis, you will be able to quickly determine whether having life insurance on your children makes sense for you and your family.

We only work with highly rated insurance companies – brand names you trust. You may be able to save money without sacrificing quality and strength.