Updated January 30th, 2025

Some may initially think that buying life insurance on a child is crazy! Children don't work and generate revenue for the household, so it would seem like a waste of money to have life insurance on a child. But the question is, is the purpose of life insurance for a child to replace income if their life is loss?

What Is Child Life Insurance?

Child life insurance covers the life of a minor and is typically purchased by a parent, guardian or grandparent.

In general, these policies are whole life products — a type of permanent life insurance. Coverage amounts tend to be low, often under $50,000, and premiums are locked in, meaning they won’t go up.

Key Reasons To Consider Child Life Insurance

While many parents may view child life insurance solely as a safety net against unforeseen circumstances, there are several compelling reasons to consider this investment:

1. Your child’s future insurability is important to you. Most children’s policies are a form of whole life insurance, which provides coverage for a lifetime so long as premiums are paid regularly. Once your child reaches a certain age, they may be able to buy additional coverage, regardless of their current health or occupation.
2. Acts as an investment vehicle for your child. Whole life insurance policies contain a savings component, which is called the cash value. This cash value grows over time, usually at a fixed rate, and can be borrowed against or paid out if the policy is surrendered. Whole Life insurance for your child is about giving them access to money for their future! Their cash value could be used for college, start a business, to invest, or even a down payment on a home! Insurance for your child is the gift that keeps on giving.
3. You want to lock in lower premiums. Generally speaking, the younger the insured person is, the cheaper their premiums will be. Insurance companies lock in these low rates for policyholders at the time of coverage and will not increase them over time.
4. Covers costs if the worst were to happen. Losing a child is extremely painful, and you may incur unexpected costs. Child life insurance policies pay out a lump sum in the event of a death, as long as the premiums are paid. The payout can be used for expenses like burial costs or grief counseling. It can also help cover the costs of running a business if you’re the owner and need to take time off.

Is Child Life Insurance The Right Move For Your Family?

Of course, every parent will have different ideas for how to help secure their children’s futures. While securing financial support through life insurance on your child may not resonate with everyone, getting life insurance policies on your children can help to jumpstart protecting their finances and insurability into the future.

If you’re considering setting up a child's life insurance policy, we invite you to click HERE to book your free consultation on setting up your children with their own policy.

Conclusion

In summary, child life insurance is more than just a safety net; it’s a forward-looking investment that provides peace of mind and financial security. From future insurability and investment potential to locking in low premiums and covering unexpected costs, this type of policy can prove invaluable in safeguarding your child’s financial future. Taking the initiative to secure a life insurance policy for them today could be a monumental step towards ensuring their long-term stability and success.