Should You Get Life Insurance for Children?

Life insurance for children is a topic that can be divisive. While it’s not a necessity, there are valid reasons to consider it.

Whether it’s for peace of mind or future financial planning, understanding the nuances of child life insurance is essential.

Do Kids Need Life Insurance?

Life insurance for children is generally not essential; however, it may be beneficial for the following reasons:

• Family history of health conditions—If your family has a history of severe medical conditions that develop early in life, you might consider life insurance for your child. Similarly, if your child has disabilities, it could be worth exploring.

• Future insurability—Purchasing a policy can help ensure your child has coverage regardless of future health conditions. This can be valuable if they develop health issues later in life.

• Gift and investment—Another reason is to gift the child an investment with a fixed rate of growth. However, this isn’t a necessity.

Remember, it’s not required, but some families choose to have life insurance for their kids. If you decide to explore this option, whole life insurance policies are standard for children, and they can offer lifelong coverage as long as premiums are paid.

What Are the Benefits of Life Insurance for Children?

Child life insurance can offer the following potential benefits:

• Cash value accumulation—Some policies, like whole life insurance, build cash value over time. This can serve as a savings component that grows tax deferred.

• Final expenses coverage—In the unfortunate event of a child’s passing, the policy can cover funeral and burial expenses, easing the financial burden on the family.

• Educational funding—Some parents use child life insurance as a way to save for their child’s education. The cash value can be accessed for college expenses.

• Low premiums—Premiums for child policies are typically lower than for adults.

What Do You Do With a Child’s Life Insurance When They Become an Adult?

When a child with a life insurance policy becomes an adult, the policy can serve several purposes. Some policies allow continued coverage without a new medical exam, while others offer cash value for education expenses or emergencies.

Conversion options may exist, allowing the child to convert the policy into an adult policy. However, premiums may increase and reviewing policy terms is essential.

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This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.