Life Insurance for Children: A Guide for Parents

Parents naturally focus on securing their child’s future. That might even include life insurance for children – policies on a kid’s life, usually bought by a parent or guardian.

Child life insurance (often whole-life coverage) lasts the child’s whole life with locked-in premiums. Though children rarely have dependents, these policies offer benefits worth understanding, which include guaranteed future coverage, a growing cash value, and help with final expenses.

In this guide, we’ll define what child life insurance is, outline its pros and cons, and give practical steps so parents can decide if a kids’ policy fits their family’s needs.

Key Takeaways

• Definition: Life insurance for kids is a policy on a child’s life, usually whole-life coverage with low, locked premiums. It builds cash value and guarantees future insurability.

• Advantages: It secures coverage regardless of future health, locks in inexpensive rates, provides a savings component, and pays out if the child dies.

• Disadvantages: It requires long-term premium payments, often yields a poor return, and may not be the best way to save. Experts note there are usually better investment alternatives.

• When to Consider: Most families focus on insuring parents first. Child insurance might make sense if a child contributes income or has health risks. Otherwise, low premiums and future insurability are the main draws.

• Next Steps: Evaluate your family’s situation, compare quotes, and consult an advisor. What’s your biggest question about this? Share in the comments — and consider using a life-insurance calculator or talking to a financial planner to get personalized guidance.

What Is Child Life Insurance?

Child life insurance is a policy covering a minor’s life, with the parent or guardian as the policyholder (and usually beneficiary).

It’s commonly sold as a whole life (permanent) policy, meaning coverage stays in force for the child’s lifetime as long as premiums are paid. Premiums are typically low and fixed – for example, a $25,000 whole-life policy on a newborn might cost about $166 per year.

These policies build a cash value: part of each premium goes into a savings component that grows tax-deferred over time. In practice, the parent owns the policy until the child reaches adulthood (often 18–25 years old), at which point the child can take over, keep it, or withdraw the cash value.

Life insurance for children differs from a typical term rider. A child rider is an add-on to a parent’s policy that gives a small death benefit if the child dies. A standalone child policy, by contrast, can have higher limits (often up to $50,000) and its own cash value. Some policies offer a conversion feature, letting the child convert the policy into a new policy when they’re an adult, without a medical exam.

Types of Life Insurance for Children

1. Whole Life Insurance for Kids
2. Term Life Insurance for Children
3. Child Riders on Parental Policies

Understanding the options is key to matching coverage to your needs. Here’s a breakdown:

1. Whole Life Insurance for Kids

This permanent policy offers lifelong coverage as long as premiums are paid. It builds cash value over time, which can be borrowed against for education or other needs. Premiums are fixed and often low when started young—think $4–$8 per month for $25,000 coverage on a newborn. Companies like Gerber Life and Mutual of Omaha specialize here, with features like automatic doubling of coverage at age 18.

2. Term Life Insurance for Children

Less common as a standalone, this provides coverage for a set period (e.g., 10–20 years). It’s cheaper but doesn’t accumulate cash value. Often, it’s added via a child rider on a parent’s term policy, covering kids until they reach adulthood (typically age 22–25).

3. Child Riders on Parental Policies

An add-on to a parent’s life insurance, this extends coverage to children for a flat fee (e.g., $5–$10/month per child, regardless of number). It pays a death benefit if a child passes and often allows conversion to a personal policy without health checks. Ideal for families wanting simple, low-cost protection.

Benefits of Child Life Insurance

Buying life insurance for children can have long-term advantages, especially for families with specific needs. Key benefits include:

1. Guaranteed Future Coverage

A child’s policy often locks in insurability. Many plans include a guaranteed purchase or conversion option, meaning when your child grows up, they can secure more coverage without a medical exam.

This is valuable if the child later develops health issues or chooses a risky career. For instance, NerdWallet explains that guaranteed insurability is useful “if the child develops a chronic health condition such as diabetes,” since healthy young adults usually pay far less.

2. Locked-In, Low Premiums

Because children are low-risk, whole-life premiums for kids are typically quite low and usually never increase. Buying early “can lock in a rate that’s likely much lower than [what the child] would get if they opened a comparable policy later in life,”. Progressive notes that a whole-life plan bought for a child guarantees coverage and “a lower fixed-rate premium” into adulthood.

3. Cash-Value Savings

A portion of each premium builds up as cash value that the child can eventually use. This fund grows tax-deferred and can be accessed via loans or withdrawals after the child matures.

For example, NerdWallet notes you can borrow from the policy for college tuition or a first-home down payment. Similarly, Thrivent highlights that the cash value is a guaranteed financial resource for future needs.

4. Financial Protection

If tragedy strikes and a child dies (a devastating and rare event), the death benefit provides funds for funeral and related expenses. Sources note that this payout can cover burial costs, counseling, medical bills, or even help a parent take time off work. It’s a way to remove the financial burden during an unimaginably painful time.

These benefits give peace of mind. As Western & Southern explains, child policies mean “lower premium rates, lifelong coverage, and the potential to secure additional coverage as [kids] grow older”. In short, they ensure kids can have life insurance later in life, even if health problems arise.

Drawbacks of Child Life Insurance

Life insurance for children also has significant downsides. Parents should weigh these cons carefully:

1. Long-Term Costs

A child policy is a decades-long commitment. You must keep paying premiums through the child’s youth and often into adulthood. If finances change and you can’t pay, the policy can lapse.

Progressive warns that “keeping [a life policy] active for your child means paying decades’ worth of premiums,” and a lapse would forfeit both coverage and cash value. NerdWallet similarly cautions that budgets and priorities change, noting your own life insurance needs should come first.

2. Low Rate of Return

Because children are very unlikely to die, child policies can be a poor investment. Aflac explicitly calls child life insurance a “poor rate of return” option, since kids have low mortality rates. Business Insider echoes this, advising that these policies are not great savings vehicles. Prudential CFP Barbara Pietrangelo told BI: “Child life insurance is marketed as a savings vehicle for parents, but there are better options to put away money for the future.” For example, a 529 college fund or high-yield savings would typically earn much more over 20 years than a low-interest insurance account.

3. Opportunity Cost

Money spent on premiums might yield more if invested elsewhere. Experts suggest comparing costs: NerdWallet even suggests keeping an emergency fund instead of a policy for most families. Alternative financial tools (college 529 plans, IRAs, regular savings) often offer higher returns or flexibility.

4. Limited Coverage Amounts

Children’s policies usually have small death benefits (often $50,000 or less). If later needs exceed that amount, a child’s policy might not be sufficient. As NerdWallet notes, “coverage amounts are low and will most likely not meet a future life insurance need”nerdwallet.com.

In summary, the downside is paying for a benefit you likely never use. CDC data show child deaths in the U.S. are extremely rare, so many experts view child life insurance as unnecessary for most parents. Western & Southern’s guide concludes that while the protection can be comforting, families must consider if the added cost fits their budget and priorities.

When Might Child Life Insurance Make Sense?

If you’re wondering, Should I get life insurance for my child? consider your family’s situation. Most experts say first ensure you have adequate coverage for yourself, since your income supports the family. Once parents’ needs are met, look at specific scenarios:

1. Health Risks or Family History

If a child has a serious genetic condition, a policy can lock in coverage. Thrivent and Aflac note that families with health issues might use child whole life insurance to guarantee future coverage.

2. Young Earners or Caretakers

A child who earns money (e.g., acting or a teen job) or provides significant help at home could justify coverage. NerdWallet lists examples: a child actor, a teen supporting household expenses, or a teenager caring for siblings. In these rare cases, losing the child could have a financial impact, so parents often consider insurance.

3. Guaranteeing Insurability

Some families simply want to lock in life insurance while the child is healthy and very low-risk. A child rider on a parent’s policy can also accomplish this cheaply. Progressive and NerdWallet note that a convertible rider or juvenile whole life ensures coverage later, even if a medical exam would be hard to pass as an adult.

4. Low Cost vs Premium

If your budget easily covers it, buying young gives a “locked-in low premium” that the child keeps forever. For example, Business Insider found that a $100,000 policy for a healthy 4-year-old could cost about $25 per month. Families who can afford it and want a forced-savings aspect may consider such a policy as a long-term plan.

In most cases, though, experts agree it’s optional. Progressive advises talking to a financial advisor: “Getting life insurance for your child can be worth it if you want a safety net…Talk with a financial advisor to understand the implications”. Ultimately, weigh your child’s role (earning or high-risk) and overall budget. If the policy premiums would strain your finances, it’s likely not worth it.

Alternatives to Child Policies

There are other ways to protect and save for a child’s future:

• Parents’ Insurance with Riders: Instead of a separate child policy, many parents add a term life rider to their own policy. This covers all kids for a small fee and is easily convertible at a later time. It’s often cheaper than standalone policies.

• Saving or Investing: Use the money for a dedicated savings plan. A 529 plan for college, Roth IRA (for older kids), or a taxable account can grow faster. Thrivent’s guide suggests investments like IRAs or 529s may yield higher returns than a child life policy’s cash value.

• Emergency Fund: Simply building a cash emergency fund is recommended if your goal is financial safety. NerdWallet explicitly suggests a rainy-day fund “with three to six months of income” as an alternative to child life insurance.

• Your Own Coverage: Don’t overlook yourself. Both NerdWallet and Progressive emphasize that a parent’s life insurance is more crucial. It replaces lost income and covers debts if something happens to you. In many cases, boosting your own policy (or buying the right amount via a term policy) gives more benefit to the family than insuring a child.

Best Life Insurance Companies for Children in 2025

Based on ratings from AM Best and J.D. Power, here are the top picks for the best child life insurance plans:

1. Nationwide: Best overall with no coverage limits on whole life and convertible riders. A+ rating; ideal for high-coverage needs.
2. Mutual of Omaha: Top for affordability and ease—online apps, free riders. Costs start at $4.61/month for young kids.
3. Gerber Life: Excellent for newborns with the Grow-Up Plan; coverage doubles at 18. Simple, no-exam policies.
4. Penn Mutual: Low complaints, dividend-paying whole life. A+ rating; great for long-term value.
5. Aflac: Strong juvenile options with term/whole mixes; no exams required.

Steps and Tips for Parents

If, after researching, you still want to pursue life insurance for a child, here are practical steps:

1. Assess Your Needs and Budget: Make sure your own life insurance needs are met first. Then, consider your household budget. Can you comfortably pay the premiums for decades? If not, skip the child policy.

2. Compare Policy Options: Talk to insurers or use online tools to compare term riders vs whole-life policies for kids. Whole life locks in benefits and builds cash value; term is temporary but cheaper. Progressive notes term policies can convert later, letting an adult continue coverage.

3. Get Multiple Quotes: Rates vary by company, child age, and coverage amount. Use life insurance calculators or speak to independent agents to get quotes. As Progressive reports, even a large policy on a baby costs relatively little, but check current prices.

4. Ask About Riders or Group Plans: If your work offers group life insurance, check if child riders are available. Or ask about “child term rider” or “family term rider” on your policy. These can cover multiple kids under one rider with minimal underwriting.

5. Consult a Professional: Consider a chat with a financial planner or insurance agent. As Business Insider suggests, a certified planner can advise if a policy or another savings method is best. An expert can clarify tax implications (e.g., loans on cash value can create taxable gains) and fit this decision into your overall financial plan.

Life insurance for kids isn’t right for every family. By understanding the details – whole vs. term policies, cash value, riders, and costs – you can make an informed choice. Whether you decide to purchase a child policy or not, having the right coverage for your family’s needs will help provide security no matter what the future brings.

Sources

1. NerdWallet

2. Choice Mutual

3. MoneyGeek

4. Business Insider

5. Aflac

6. Western & Southern

7. Thrivent

8. Trust & Will

9. Wikipedia – Child life insurance

10. Investopedia – Limited Payment Life Insurance

11. Investopedia – Newborn Life Insurance

12. Mutual of Omaha

13. Wikipedia – Juvenile Life Insurance

14. Investopedia – Guaranteed Insurability Rider