Best Life Insurance For Kids And Its Long-Term Benefits

We all know the benefits and importance of life insurance. But when it comes to your child it might be an emotional decision to make. Read this article to help you choose the best life insurance for kids And to know the importance of life insurance for your child.

Parents have a very emotional and intimate bond with their children, a bond that can’t be put into words. The thought of something happening to them can send a parent into a turmoil of emotions so severe that they don’t even try thinking about the possibility of anything wrong happening to them let alone losing them.

The undying love of a parent for their child doesn’t let the thought of getting life insurance for their child cross their mind and hence they fail to see the potential benefits they can gain from it. There are many advantages to getting life insurance for kids. And the fact that life insurance for a child can only come in handy when you are met with the unfortunate incident of losing your child is not true at all.

Life insurance for your child can not only provide a potential safety net for your family if your child passes away, but it can also provide other benefits such as lower life insurance rates for your child when they reach adulthood. You can lock in a low rate, get lifetime coverage, protect your child’s future insurability, and build cash value by purchasing whole life insurance for children. Through this guide, you’ll get to know all about what child insurance is and its benefits.

So yes, this is an all-in-one guide. After reading this, you can instantly understand the basics of child life insurance and learn about the best life insurance for kids based on insurance policies that offer the best coverage benefits, price, ease of qualifying, future coverage options, and more.

What Is child life insurance?

A life insurance policy for a child, like an adult policy, is a contract with an insurance company. Premiums are paid (typically monthly or annually) in exchange for the insurance company’s promise to pay a death benefit if the child passes away.

In the case of an adult insurance policy, the policyholder is typically the insured person, the person who is covered by the policy. A child’s policy insures the child, but the policyholder is a parent, grandparent, or legal guardian. If the insured child dies, the policyholder can be the beneficiary of who receives a payout.

Children’s life insurance policies are typically whole life insurance policies, which provide lifelong coverage as long as premiums are paid. Premiums are usually guaranteed, which means they will not rise over time. Furthermore, a portion of the premium is used to accumulate cash value, which can be accessed at any time while the child is alive.

A child cannot be covered by a term insurance life policy, which provides coverage for a set number of years. However, if you purchase a term life insurance policy for yourself, you may be able to add a rider that will cover all of your children until they reach a certain age, at which point the coverage will most likely be converted to permanent policies for them at an additional cost

Why should you consider buying life insurance for your child?

Some may object to insurance for minors because the primary purpose of life insurance is to replace the income of a working adult. However, there are numerous other reasons why purchasing life insurance for your child may be a good idea for you.

Cash value as well as living benefits

The cash value of a permanent life policy (such as whole life, universal, or variable life) can be withdrawn or borrowed against, providing living benefits that your child can use as he or she grows older for a variety of purposes, including

  • College tuition and expenses
  • Financing a vehicle
  • Paying for a wedding
  • Collateral for loans

They’ll always be covered by insurance.

A variety of factors can influence your child’s future insurability. High blood pressure, diabetes, obesity, and cancer are just a few of the many health issues that could prevent your child from receiving insurance in the future. One of the most important advantages of purchasing a permanent life insurance policy when they are young is that they will always be covered regardless of their future health as long as the required premiums are paid.

It has monetary value

A portion of the premiums paid for a whole life insurance policy is allocated to the accumulation of cash value. When you purchase a policy for a child, a larger portion of the premium will go toward the cash value because the cost of insurance is lower and the cash value has more time to accumulate.

That extra time you get to accumulate cash has some value, and the cash value can be accessed for any reason. However, withdrawing cash from the policy may result in a tax bill and will reduce the death benefit.

Guaranteed insurability

Some life insurance policies for children include an optional guaranteed insurability rider/endorsement that may be purchased separately. This rider allows your child to purchase additional life insurance above the face value of the current policy (on specific dates and in certain increments) regardless of his or her health status at the time.

Typically, the policy owner has fewer dates to purchase more life insurance under the rider as the child grows older. In some cases, the rider may not be exercised after a certain age.

A fixed interest rate

Life insurance premiums for minors can be very low. Purchasing life insurance for your child now may allow you to lock in that rate for the duration of the policy. The policy will remain in effect as long as the required premium is paid.

Policies differ greatly from one company to the next. A life insurance professional can assist you in selecting the appropriate policy type and optional policy riders to ensure that your child gets the most out of their policy, even when he or she is an adult with a family of their own.

Freedom to mourn and ponder on your loss

The death of a kid is most certainly the most terrible thing that can happen. Day-to-day obligations, such as meeting the demands of your job, paying the bills, and taking care of other children in the family, may be too much to handle in such a tragic and untimely incident.

It’s a possibility that you might not have enough paid sick or vacation time from your job to care for yourself, your spouse, or your other children during this trying time. Have you done enough financial planning to have the means to return to work on your terms if the unthinkable were to occur?

It provides funds for funeral expenses.

Since the chances of a child dying are fortunately very low, funeral costs are not a compelling reason to purchase life insurance for a child. However, if this occurs, a life insurance policy will provide funds to assist in covering the cost of final expenses. It may also allow the family to take time off work to grieve the loss of a child.

If you only need life insurance for a child to cover funeral expenses, you can probably add a rider to your life insurance policy to cover your child for less than the cost of a whole life insurance policy on the child.

Who shouldn’t consider buying life insurance for their kids?

Some people do not want or need life insurance, and some parents, grandparents, or guardians may choose not to purchase it for their child. Reasons for not purchasing children’s life insurance include:

There are other options for saving for your child’s future.

Investment options can range from bank savings accounts to mutual funds, as well as 529 college savings plans, depending on your risk tolerance and desire for returns. Some adult life insurance policies, such as variable life insurance, include investment components.

Death benefits are modest.

Unlike adult life insurance policies, which can pay up to $500,000 or more in death benefits, child policies typically pay $50,000 or less.

You are unable to pay the premium.

In general, the premiums for children’s life insurance policies are lower than the premiums for adult policies. However, you may have financial priorities or obligations that make covering a child’s life insurance premium difficult.

How can you buy life insurance for your child?

There are a couple of ways to get your child insured. A children’s life insurance rider can be added to a term or permanent policy purchased for yourself, or you can purchase a separate policy in the child’s name. The best children’s life insurance companies provide both options and allow you to convert a term rider for a child to permanent coverage once the child reaches the age of 18. Calling an agent directly is the best way to get a quote and apply for a child’s life insurance policy.

Things to consider before buying life insurance for your kids

Before purchasing a policy for your children, consider your budget and your life insurance requirements. Generally speaking, your life insurance is more significant than that of your child because it can assist in supporting your family’s living expenses or other expenses in the event of your passing.

Instead of getting your kids their insurance policies, you might want to think about adding a child-term life insurance rider to your policy. When the term is up, you may in some circumstances be able to convert child riders to permanent coverage. These riders may not be offered by all insurers, and coverage quantities might be constrained.

Alternatively, if your employer offers group life insurance, you might be able to add extra life insurance for a kid or spouse. But since group life insurance policies are frequently linked to your employment, you risk losing your coverage if you change jobs.

The best life insurance for kids

After developing an understanding of what life insurance is for children and why it is necessary, if not necessary but it is a beneficial long-term investment for the future of your children. After thorough research, we have narrowed down some companies that have the highest rating for being the best life insurance for kids so you can make a better decision for your child.

  • Mutual of Omaha
  • Globe life
  • Foresters Financial
  • State Farm
  • American Family
  • Gerber
  • Aflac

Mutual of Omaha

Our top pick for the best life insurance for kids is Mutual of Omaha because of its simple application process, affordable prices, and excellent customer support. For kids from 14 days to 17 years old, Mutual of Omaha offers permanent whole-life insurance policies priced between $5,000 and $50,000. Online or over the phone with an expert advisor, parents can purchase policies at their convenience.

The insurance is based on a streamlined underwriting procedure, and the application only asks three questions about the applicant’s health. There is no medical examination required, and the policy will be accepted and given as long as your child or grandchild is in the eligible age range and the application is complete.

The child’s life insurance coverage accrues cash value over time, just like whole life insurance does for adults. It is simple and quick to get immediate coverage in place without a waiting period thanks to Mutual of Omaha’s stellar reputation for customer care. it offers a policy for the child’s whole life

Pros

  • Children’s full life insurance coverage of up to $50,000
  • child-friendly prices
  • Quick and simple application

Cons

  • There are no riders available

Globe Life

Globe Life offers the cheapest rates for children’s whole life insurance, as well as a simple application, quick approvals, and no waiting period. It offers a whole life insurance policy for children with coverage amounts ranging from $5,000 to $30,000, sold in $5,000 increments. Coverage can be quoted in minutes, and the application process is straightforward.

A few health questions must be answered, but no medical exam is required for approval. You can apply for and purchase whole life insurance for children online or over the phone, with the option to add an accidental death rider that increases the death benefit by up to $20,000 for less than $1 per month.

As a bonus, the first month of coverage at Globe Life is only $1, with the full monthly premium due after that. Once locked in, rates will never rise, and the policy will accrue cash value as your child grows. This cash value can be used for future financial needs such as college or a first home purchase. It also offers a whole-life child policy.

Pros

  • There is no wait time
  • Starting prices are only $2.17 per month.
  • You can include an accident benefits rider.

Cons

  • Coverage limits decrease with age

Foresters Financial

It is one of our top picks for the best life insurance for kids because it offers the most coverage, the greatest policy selections, and membership benefit incentives. There aren’t usually a lot of alternatives and perks available when purchasing life insurance for kids. Not at Foresters Financial, though.

Children’s whole life insurance from Foresters is available up to a maximum of $75,000, and four beneficial riders are available at no additional cost: guaranteed insurability, terminal illness death benefit, common carrier accidental death, and family health benefit. Children can enjoy membership advantages for the whole of their lives at BrightFuture beginning at age 16.

The membership includes discounts for members on family-oriented activities and shopping, orphan benefits and scholarships for children who lose one or more parents, local branch membership, online legal document preparation services, and community grant opportunities.

When you’re ready, you can transfer ownership of the insurance to your kid or grandchild, who can then, if necessary, change the coverage. In contrast to other providers who offer fewer benefits and policy options, Foresters Financial offers whole life insurance for children that offers a lot without charging excessive premiums.

Pros

  • Several valuable riders are included for free on all plans.
  • $75,000 in coverage maximum
  • After a youngster turns 16, lucrative membership perks are available.

Cons

  • Average rates

State Farm

Most State Farm life insurance policies include a children’s term rider, which covers all children for a single premium. We chose State Farm as the best option for this low-cost rider as an alternative to a separate child life insurance policy.

Adding a rider to a parent’s or grandparent’s life insurance policy is one of the most cost-effective ways to obtain life insurance for children. State Farm provides a children’s term rider for up to $20,000 per child. There is no limit to the number of children covered, and the rate is the same regardless of the number of children.

When the rider goes into effect, all children over the age of 15 are automatically covered, regardless of health. When each child reaches the age of 25, the term rider coverage automatically expires. When a child reaches the age of 18 or 25, the term rider coverage amount can be converted to a policy with up to five times that amount in permanent life insurance.

For example, if your State Farm life insurance policy includes a $20,000 children’s term rider, you can convert up to $100,000 in whole life insurance per child at these milestone birthdays, regardless of health. This is an excellent way to provide your child with permanent life insurance. In contrast to insurance policies, it offers three kinds of policies which include

  • Term
  • Universal life
  • Whole life

Pros

  • All children are covered by a single rider.
  • Convertible at the age of 18 or 25 for five times the rider amount
  • More cost-effective than a child’s entire life

Cons

  • Only avail until the insurer turns 65

American Family

Along with its comprehensive coverage, American Family — also known as AmFam — distinguishes itself with flexible payment options that allow you to pay off the policy sooner. You can choose between a 10-year and a 20-year payment plan, with the latter offering lower life insurance rates. The premiums are fixed regardless of which plan you choose.

The policy includes a built-in guaranteed purchase option benefit rider, which allows you to increase coverage when the child goes through major life events such as getting married, purchasing a home, or becoming a parent. At any of those times, American Family does not require a life insurance medical exam.

Pros

  • There are generous coverage amounts available.

Cons

  • There is no way to apply without going through an agent.

Gerber

Gerber’s Grow-Up Plan is available to children up to the age of 14. It has a unique selling point: when the child turns 18, the coverage amount doubles while the premiums remain the same. So, if you buy a $50,000 policy when your child is a baby, it will grow to $100,000 when the child reaches adulthood. Gerber also allows the child to purchase additional coverage as an adult, and it stands out by providing up to ten times the original policy value.

The cash value of your whole life insurance policy grows over time, and once you’ve accumulated enough, you can borrow against it. Gerber is open about its policy loan interest rate, which is 8%.

You can apply for a policy online or by phone, and according to the company, more than 75% of applicants are approved almost immediately. The insurer also provides a 10% discount on monthly premiums for setting up automatic payments.

Pros

  • When a child reaches the age of 18, his or her coverage automatically doubles.

Cons

  • It has a lot of complaints

Aflac

Aflac is exceptional as it gives its customers an option between whole life and term life insurance. For kids aged 14 days to 17 years old, both insurances are offered, with coverage levels ranging from $10,000 to $30,000. Since the insurance doesn’t provide online quotations, you’ll need to speak with an Aflac representative to learn how much coverage would cost and to submit an application.

The entire life option offers everlasting coverage, just like all permanent insurance, even if the youngster experiences health issues later in life. The child is covered by the term life insurance policy of Aflac until they turn 25. At that point, the young adult can upgrade the current coverage—which is currently worth up to double the face amount—to a whole-life policy without having to undergo a medical examination.

Pros

  • Whole or term life insurance options are available.

Cons

  • Low-cost insurance coverage.

Possible disadvantages of buying life insurance for your children

  • It offers a negligible rate of return
  • It’s a long-term commitment
  • Coverage limits are typically low
  • It’s a monetary trade-off

It offers a negligible rate of return

Even though whole life insurance policies accumulate cash value but they do so at a low rate of return. As a result, life insurance for a child should not be used in place of a 529 college savings plan, which is a government-sponsored investment plan that allows you to save for a beneficiary while also paying for education costs.

If you buy a policy for a newborn, it usually takes 15 years before the cash value equals the premiums paid, at which point the policy becomes profitable. However, if you invested in a 529 college savings plan and earned a 7% return (the average stock market return), your investment would double in 10 years. Investing in a 529 plan yields much higher returns than investing in a life insurance

It’s a long-term commitment

When you purchase a whole life insurance policy, you should expect to pay premiums for several decades. If your cash flow becomes tight, it won’t be worth it if you have to cancel.

If the policy has enough cash value, you may be able to use it to cover premium payments for a while. However, your child will have less cash value if he or she requires it later in life.

Coverage limits are typically low

Several insurers cap the amount of coverage for children’s life insurance policies at $50,000 or $75,000. That will not suffice once your child is an adult with a family to support. To have adequate coverage, they will most likely need to purchase life insurance as an adult.

It’s a monetary trade-off.

When you purchase life insurance for a child, you are foregoing funds that could be used to support your child’s well-being, according to Meldrum. Because your child is unlikely to die at a young age, your money may be better spent elsewhere.

What information is required for children’s life insurance?

Most children’s life insurance policies ask few or no health questions, and few require a medical exam, but most children’s life insurance policies only require a few pieces of information. Only the child’s full name, date of birth, and social security number are typically required. Some children’s life insurance policies, on the other hand, ask a few health-related questions, such as

  • Has a chronic medical condition that affects your child been discovered or treated?
  • Have you ever had your child tested for or treated for a congenital disorder, developmental problem, or heart or circulatory disease?

Getting accepted shouldn’t be a problem if there are any health-related questions and you can answer “no” to them. In that case, a guaranteed whole life insurance plan without health limitations might be the best option.

Some common queries regarding life insurance for kids

Do you need approval from your child?

The fact that your child is a minor means that they do not need to consent to the life insurance policy. When a grandparent buys life insurance for their grandchild, one or both of the parents often have to sign a consent form approving the purchase and granting access to their medical data, if necessary.

Does a waiting period apply?

In general, a life insurance policy for children does not have a waiting period. This indicates that if they pass away after the insurance goes into force, the beneficiary will get the entire death benefit. A suicide clause is present in every life insurance policy. The beneficiary will not get the death benefit if the insured commits suicide within the first two years of the policy.

Is there an age limit?

Yes, most child life insurance policies can begin as early as 14 or 15 days old, and coverage can be purchased up until the kid turns 18 years old. If you stop making payments or cancel the policy, the coverage under a whole life insurance policy is guaranteed for life.

Is the health of the child a factor?

Health is a consideration for children’s guaranteed issue whole life insurance but not for children’s simplified issue whole life insurance. To determine eligibility, a simplified issue whole life application includes two to three questions concerning the child’s health.

Neither insurance calls for a medical examination. For a guaranteed issue whole life policy there are no health questions, and typically there aren’t any for a children’s term rider added to a parent’s or grandparent’s policy either.

When does buying life insurance for your children make sense?

Nobody wants to consider the possibility of their child or grandchild passing away. For some people, it is regrettably a reality. Children’s life insurance can cover burial costs and medical fees if a child becomes ill or is wounded and passes away.

In general, buying life insurance for children only makes sense if their risk of developing a congenital or inherited ailment that might make it impossible for them to obtain life insurance when they get older is higher. It may make sense to purchase coverage when your child is younger and thought to be in the best health if you are worried about their capacity to be insured in the future.

However, it doesn’t make sense to purchase life insurance for your children if your family is typically healthy, you don’t have a history of uninsurable health conditions, and you have enough money set up to cover medical costs and burial should the unthinkable occur.

Conclusion:

As a parent getting your head wrapped around the idea of life insurance for your precious child might be a traumatic thing to do. But after going through all the long-term benefits life insurance can provide for you, your kid and your family might be able to change the way you think.

While we are familiar with basic adult life insurance, children’s life insurance is a completely different story. In addition to covering expenses at the time of the unfortunate untimely death of a child, many parents buy them to ensure their children’s life insurance coverage as adults. Furthermore, most children’s policies allow you to build up a cash value that can be used to help your child pay for college, start a business, or buy their first home as they get older.

The best life insurance company for your child provides adequate coverage and policy options at a reasonable cost. Get three or more quotes from different carriers before purchasing life insurance for your child to compare premiums and features. Pay close attention to free and paid riders that may be of assistance to your child. Doing adequate research would be an immense help when choosing the best life insurance for kids.

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.