What is life insurance for children?
Life insurance for children is usually purchased by a parent or guardian as a safety net in case their child passes away. These policies can be term-based, lasting until around the age the child becomes an adult. It's also possible to purchase a permanent life policy, which would allow the child to access coverage for their entire life at a locked-in lower rate due to their young age. Note that life insurance for children is distinct from a child rider.
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How does child life insurance work?
Life insurance for children is usually a term or whole life insurance policy where a minor is the insured and their parent or guardian is the beneficiary. If the child passes away while they're a minor, their parent or guardian receives the policy's death benefit. With a convertible term or whole life insurance policy, it's also possible to transfer the policy to the child once they're an adult.
What does life insurance for a child cover?
The beneficiaries of a child's life insurance policy can spend the death benefit any way they choose, such as to cover funeral expenses or to allow them to take time off work. However, many parents and guardians also purchase life insurance for their children to provide them with coverage and financial support later in life. Purchasing a whole life or term life policy with a conversion rider is ideal if you intend to transfer the policy to your child once they're old enough.
How much does life insurance for children cost?
Life insurance for a child generally costs less than for an adult. Forbes estimates that a $50,000 whole life insurance policy for a baby under one year old costs an average of $27 per month as of 2023. Keep in mind that the cost of a child's life insurance policy will vary based on their age, health, policy type, and many another factors, just as a policy for an adult does. Learn more about the factors that affect the cost of life insurance.
Should I buy life insurance for my child?
Getting life insurance for your child can be worth it if you want to make sure there's a financial safety net for your family in case your child passes away. There are some other benefits to getting life insurance for a child, such as potentially lower life insurance rates once they're an adult. Talk with a financial advisor to understand the implications of purchasing life insurance for your child while they're a minor.
What's the best age to take out life insurance for my child?
The minimum age for life insurance ranges from 0-14 days, meaning you can take out life insurance for your baby, child, or teen. Typically, no medical exam is needed to qualify for coverage, so you can easily enroll them whenever the timing is best, but enrolling them at a younger age may result in a lower premium.
Pros of getting life insurance for children
Ensuring lifelong coverage: Purchasing a convertible term or whole life policy for a young child ensures they'll have coverage later in life, especially if they develop a medical condition that may make buying their own policy difficult.
More cash value: Buying a whole life policy for a child allows more time for the cash value account to grow, providing them with an additional financial resource once they reach adulthood.
Helps cover funeral services: If the unthinkable does happen, you'll have funds available for funeral services and to take time off from work.
Cheaper premiums: Since children cost less to insure, you can get a lower premium on a whole life policy than if your child were to wait to get their own policy as an adult.
Cons of getting life insurance for children
Long-term costs: Keeping a life insurance policy active for your child means paying decades worth of premiums. If the policy becomes unaffordable, you may have to cancel it before your child can take over the premium payments.
Other investment options: There are other ways to provide financial support for a child once they reach adulthood, such as a 529 college savings plan. Consult a financial advisor to compare all of your options before choosing a plan or policy.
What type of life insurance is best for children?
While many parents choose a term policy for their child's life insurance, you might decide to get permanent life insurance (like a whole life policy) if you want to make sure your child and their future family have coverage into adulthood.
If you think your child will want life insurance coverage as an adult, getting a whole life insurance policy for them when they're a child can help lock in a lower fixed-rate premium, since life insurance rates generally increase as you age. A whole life policy will accumulate cash value, and it can help provide a financial safety net for future generations, since the beneficiaries could eventually be changed to your child's spouse and children.
That said, permanent life insurance policies are considerably more expensive than term policies. It may make more sense to purchase a term policy for your child when they're young. When they reach adulthood, they may be able to convert it to a permanent policy themselves if they want to keep it. That way, the higher premium will only apply once the policy is converted.
Life insurance for children vs. child insurance rider
Life insurance for children is distinct from a child life insurance rider, which is an extension of your or your partner's life insurance policy that allows for a small death benefit if your child dies. A child rider can be more affordable, and it can often be converted into a separate policy for your child once they're an adult.
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