The primary purpose of life insurance is to leave a financial safety net for your loved ones in the event of your death and ensure that they don’t suffer financially without your income. In most cases, parents don’t rely financially on their minor children, so there’s no need to buy life insurance for them — and the few existing options on the market are expensive and complex.
If you want to get some insurance coverage for your child, one of your best options is to get your own life insurance policy and add a child rider — a coverage supplement that will cover all the children in your household for a small fee. If your child has a disability or is at high risk due to illness, buying an individual whole life insurance policy for them will be your best bet.
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Who needs life insurance for their children?
Most people don’t need life insurance for their children. However, you may want to consider getting a life insurance policy for your child if:
You have a family history of serious medical conditions that develop early in life, or
You have a child with disabilities.
Otherwise, your child most likely doesn’t need to have their own life insurance yet. They’ll likely be able to get their own affordable life insurance in their 20s and 30s.
How does life insurance for children work?
Life insurance for children works much like it does for adults: You’ll pay premiums and if the child dies while the policy is active, you’ll receive a payout known as the death benefit.
Unlike coverage for adults, however, the options for children are limited. Parents who want to buy coverage for their children only have the option of whole life insurance policies.
Whole life is a type of permanent life insurance that never expires — which means your kid would be covered for their entire life as long as they keep paying the premiums. Whole life also comes with a cash value account that grows tax-free over time. However, whole life policies are usually significantly more expensive than a comparable term life insurance policy.
Getting a whole life insurance policy for your child has several considerations:
Whole life policies don’t offer competitive rates compared to term life insurance.
They come with high administrative fees and low payouts.
Any growth for cash value is slow.
At the same time, securing a whole life insurance for a child with disabilities or at risk due to a serious health condition can have some advantages.
It will cover them for their entire lives, as long as the policy remains active.
They won’t have to worry about not being eligible to buy their own policy later on due to health issues.
Child life insurance pros and cons
Pros | Cons |
|---|---|
Guaranteed insurability | Low coverage amounts |
Covers funeral costs | Chances of a child dying are very low |
Locks in lower rates | Expensive long-term commitment |
Cash value | Low rate of return on investment |
Sacrifice investment in other savings accounts |
Best whole life insurance for children: MassMutual
2023 Policygenius award winner
MassMutual
4.9
All 50 states
Why we chose it
MassMutual’s whole life insurance plan provides a lifetime coverage option that builds cash value with the potential to earn dividends.
Pros and cons
Pros
Strong financial stability ratings
Higher potential for dividends for whole life policyholders than many competitors
Good customer satisfaction ratings
Cons
High term life premiums
Term life not available through Policygenius
MassMutual pays higher dividends to its cash value policyholders than many competitors. It has high customer experience ratings compared to other insurers and consistently receives high third-party financial stability ratings, which is especially important when purchasing a lifelong policy.
Child life insurance vs. child riders
If you still need to insure your child’s life, it’s simpler and cheaper to buy a term life insurance policy for yourself and add a child rider to your term policy. Riders are add-ons that can provide supplemental coverage to a life insurance policy under specific circumstances.
People often confuse child life insurance with child riders, but there’s a big difference between the two.
Child life insurance is a standalone policy that insures a child’s life. The insurer pays out a death benefit when the child passes away.
Child riders are optional add-ons to your own policy that pay out a small death benefit if one of your children dies. Coverage is tied to the parent’s or guardian’s policy.
Comparing child life insurance vs. child rider
Child life insurance policy | Child rider | |
|---|---|---|
Who’s insured? | The child | The parent or guardian primarily and child secondarily |
Type of policy | Permanent | Term |
Cost per year | $219.84 | $150 (in addition to policy premiums) |
Coverage limits | $50,000 | $25,000 |
Sample child life insurance cost is based on a $25,000 Gerber Life policy for a 1-year-old male in Ohio. Sample child rider cost is based on a $25,000 rider added to a Protective term life insurance policy at $6 per $1000 of coverage. Rate illustration valid as of 09/22/2023.
Benefits of a child rider vs. child life insurance
If all you need is peace of mind should the unthinkable happen, a child rider will be a better option than a standalone child life insurance policy.
Straightforward coverage. A child rider provides coverage for your child without the complex investing component that child policies have.
Flexibility to convert. As your child grows, if their needs change and you decide they need lifelong coverage, you can convert the rider into a whole life policy.
Affordability. A child rider is more affordable than a full child life insurance policy. It usually costs about $50 per year for a $10,000 child rider.
→ Average cost of life insurance
Child riders by life insurance company
Here’s how Policygenius’ partner insurance companies handle child riders on term life policies:
Company | Eligible ages | Coverage amount | Annual cost per $1,000 |
|---|---|---|---|
15 days-18 years | $5,000 or $10,000 | $5.50 | |
15 days-18 years | $500-25,000 | $5.00 | |
15 days-18 years | $1,000-15,000 | $5.00 | |
15 days-20 years | $1,000-10,000 | $7.20 | |
15 days-18 years | $1,000-10,000 | $5.50 | |
15 days-18 years | $1,000-25,000 | $6.00 | |
15 days-18 years | $10,000-100,000 | $5.15 | |
15 day-17 years | $1,000- $10,000 | $4.20 | |
15 days-18 years | $1,000-$99,000 | $6.00 |
Methodology: Information based on policies offered by Policygenius as of 09/22/2023.
Alternatives to life insurance for children
Rather than getting a life insurance policy, you may be better off setting up a savings plan to cover your children's future expenses.
There are several ways to invest the money you’d have spent on your child’s life insurance and instead save it for them to use during their life.
529 savings plan: These plans are tax-advantaged accounts sponsored by the government. There are two types of 529 accounts: prepaid tuition plans and education savings plans. Both are exclusively for higher education expenses and qualified withdrawals are tax-free.
Custodial account: Parents can save and invest in a custodial account held in the name of their child, such as UTMA (Uniform Transfers to Minors Act) or UGMA (Universal Gifts to Minors Act) to build savings for their child. Custodial accounts are handled by the parent or guardian and transferred to the child when they turn 18 or 21 years old.
IRA: If your child earns money, you can manage an IRA savings account for them and match their earnings to jump-start retirement savings.
The Bottom Line
Getting a life insurance policy for your child is a good idea only in rare circumstances. For example, if your child has a disability or is at risk for a major medical issue, getting them their own policy could be advantageous.
Instead, the best way for most people to protect your children financially is to have your own policy. This way, your child will be protected financially if you die.
You can also consider adding a child rider to your own term life policy and saving for their future through alternative savings plans and accounts.
Frequently asked questions
What is the best life insurance for a child?
Because children rarely need their own life insurance policy, the best way to get coverage for your child is to get your own life insurance policy and add a child rider.
Should you purchase life insurance for your child?
Purchasing life insurance for your child isn’t a good idea unless you have sufficient disposable income or if your child has specific needs and may not qualify for coverage as an adult.
Is child life insurance a good savings vehicle?
Child life insurance is not a good way to save for your child. The cash value of the policies grows at a lower rate and comes with higher administrative fees than traditional savings and investment accounts. Instead, you can focus on a 529 plan to save for their future.
