Does your child need life insurance? What to know

Should you take out a life insurance policy for your children? Here’s what you should know about child life insurance policies and when it makes sense to purchase one. (iStock)

Every parent and legal guardian will agree that children are life’s most precious gift. Sadly, fatal accidents and medical emergencies sometimes occur. Over half of all adults in the United States have some form of life insurance coverage, but do children need similar life coverage?

Getting life insurance for children does exist  – just like auto insurance, business insurance, disability insurance and travel insurance – and can provide parents or grandparents (or legal guardians) with peace of mind. These policies aren’t too dissimilar to adult life insurance policies: they’re designed to cover the funeral and burial costs in the event of an untimely death. One out of every five parents and grandparents have taken out a life insurance policy for their children or grandchildren, according to one study.


Is a life insurance policy an option that you should consider for your child? Depending on personal factors and your financial situation, opening up a child life insurance policy may be an option worth looking into during the life planning process.

Selecting a life insurance policy can be difficult, but it doesn’t need to be. You can visit an online marketplace like Credible to shop dozens of insurance providers and compare life insurance policies without ever leaving home.

What is child life insurance?

There are many similarities to adult and child life insurance policies, however, there are also key differences. A life insurance policy for a child typically provides a death benefit in the event of the child’s death. These policies are paid either monthly or annually and are whole life insurance polices (as opposed to term life insurance policies). Most companies will insure children 17 and under, though some may lower the maximum age to 14-16.


Although the child is insured, they cannot be the policy holder. A parent or guardian must be the policy holder but can transfer the policy over to the child when they enter adulthood, effectively providing them with a permanent life insurance policy as long as premiums are paid on time. However, many insurance companies limit the coverage amount to between $50,000 and $100,000.

Are you interested in exploring life insurance policies for you or your children? Visit Credible to explore your options.

When does getting a child life insurance make sense?

An adult life insurance policy is designed to provide a family with protection for a better financial future in the event that an income-earner passes away. Because most children are not the head-of-household, the only financial burden their untimely death would create would typically be related to medical and funeral expenses.


Does getting a child life insurance make sense? For families with a history of genetic medical conditions, yes. Rates on child life insurance rarely increase which means taking out a policy now will also provide your child with a low-rate life insurance policy at a time in the future when they transition into adulthood. If your child is a celebrity or generates a substantial amount of income that the whole family relies on, a dedicated life insurance policy for the child would be wise.

For other families, however, investing in this policy may unnecessarily strain their finances. These policies offer a low rate of return and require decades worth of monthly payments. Alternatively, many adult life insurance policies allow policyholders to add a child rider that only increases the premium by a few dollars. By dedicating the remaining funds to another savings account with a higher rate of return, the investment could be used for other expenses like savings for college tuition.

A life insurance plan should be as unique as the adults and children that it covers. Explore pricing and find the right life insurance plan that fits your family’s needs on Credible.

What to consider before buying?

All parents and guardians want to make the best financial decisions for their loved ones. Before you take out a life insurance policy for your child, weigh the pros and cons: you need to consider your personal budget, family medical history and long-term financial goals.

You may also want to speak with a financial advisor, too, to come up with a sound financial plan for your family as well as your child's future. A child life insurance policy is essentially a financial safety net in the event that the worst life events would happen. At the very least, it can provide you with peace of mind until your child reaches adulthood.


However, if you’re interested in creating a savings account that potentially covers funeral expenses or adds to an emergency fund for your child, you may want to consider a high-yield savings account. Explore high-yield savings options and discover how you could maximize these emergency-savings by visiting the Credible marketplace.

Before selecting a policy, determine what monthly payment range you’re able to commit to for the foreseeable future and consider how that amount can be best invested to protect your family financially for years to come.

Are you ready to investigate options for life insurance for your child? Compare life insurance companies and shop their plans via Credible today.

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