Children’s life insurance policies cover the life of a child and are typically purchased by a parent or grandparent. Usually, these policies are whole life products (but sometimes can be an index universal life). This means coverage lasts for the child’s entire life, as long as the premiums are paid.  Coverage amounts tend to be low, often under $50,000, and premiums are locked in, meaning they won’t go up. At certain ages, such as 18 or 21, the child can take ownership of the policy and continue coverage, buy more, or cancel the policy.

What are the Benefits of Buying Insurance for Children?

1. Guarantees future insurability: Children’s life insurance policies typically include a guaranteed purchase option. It allows you to buy a certain amount of coverage at a locked-in health classification in the future. This means the child can purchase additional coverage without completing a medical exam.
2. Cash value that grows: You can withdraw money from the cash value account or borrow against it. When the child reaches adulthood, he or she can surrender the policy and receive the funds in full.
3. Covers costs if the worst were to happen: Losing a child can be extremely difficult, and you may incur unexpected costs. Children’s life insurance policies pay out a lump sum in the event of a death.
4. Long-term protection at lower premiums: Since the cost of life insurance depends largely on age and health, purchasing a policy when they’re young can lock in a lower premium for the life of the policy.

What to Know About Buying Life Insurance for Children

Buying life insurance for a child is quick and easy. You will fill out an application, but the child won’t have to go through a medical exam. Usually, you can buy life insurance for a child who is age 17 or younger. The coverage, though, remains in effect throughout the child’s life, as long as the premiums are paid. As the owner of the child’s policy, you can transfer it to your child at any point. Most times parents transfer the policies to their kids once they’re adults and let them take over premium payments.

Who Offers These Types of Policies?

There are many companies out there that offer children’s whole life policies. Mutual of Omaha has its Children’s Whole Life policy. Gerber also offers their Grow-Up Plan. If you want to talk about index universal life policies, North American has a great product in the Builder Plus 3. To see what else is available call us here at Pinnacle Financial Services and speak to a knowledgeable Life Sales Director.

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