{"id":350817,"date":"2025-11-07T13:14:27","date_gmt":"2025-11-07T18:14:27","guid":{"rendered":"https:\/\/www.reviews.com\/?p=350817"},"modified":"2025-11-07T13:14:27","modified_gmt":"2025-11-07T18:14:27","slug":"for-children","status":"publish","type":"post","link":"https:\/\/www.reviews.com\/insurance\/life\/for-children\/","title":{"rendered":"Life Insurance for Children"},"content":{"rendered":"\n

While discussions about life insurance<\/a> are more common as you get older, some people advocate for buying life insurance for children. Evidence shows the risk of a child dying in the U.S. is very low beyond infancy\u2014more than 99.4% of newborns typically survive to age 5 (under\u20115 mortality \u22486 per 1,000<\/a>), and the 2022 U.S. infant mortality rate was 5.60 per 1,000 live births (CDC<\/a>). Among school\u2011age children (ages 5\u201314), annual death rates are only in the tens per 100,000 and are largely driven by preventable injuries (CDC WISQARS<\/a>). If you\u2019re considering getting child life insurance, weigh the trade\u2011offs carefully and compare against alternatives like a low\u2011cost child rider and tax\u2011advantaged savings\/investing accounts.<\/p>\n\n\n\n

How does life insurance for kids work?<\/strong><\/h2>\n\n\n\n

Life insurance for kids works similarly to the options that are available for adults. Most child life insurance policies are whole life insurance plans instead of term life insurance<\/a>. Whole life provides lifelong coverage with level premiums and cash value that grows over time, but early\u2011year surrender values are typically low because expenses are front\u2011loaded (NAIC<\/a>; FINRA<\/a>). Entry\u2011level juvenile whole life is often marketed direct\u2011to\u2011consumer with simplified applications and instant decisions, fixed premiums, and small face amounts suitable for parents or grandparents to own (Gerber Life<\/a>; Mutual of Omaha<\/a>; LIMRA<\/a>).<\/p>\n\n\n\n

Additionally, you may be able to add a child rider to your life insurance policy. Instead of opening a new policy for each child, you would pay a higher premium on your plan for the expanded coverage to all of your children. Common features include flat rider charges that cover all eligible children and per\u2011child coverage amounts often up to $20,000\u2013$25,000, with the right to convert that term coverage to permanent insurance later without new medical underwriting\u2014typically within specified age windows (often through about age 25) (State Farm<\/a>; NAIC<\/a>).<\/p>\n\n\n\n

Pros of buying life insurance for children<\/strong><\/h2>\n\n\n\n

Secures the ability to get more coverage later in life<\/strong><\/h3>\n\n\n\n

If your child later develops a health condition, qualifying for new coverage can be difficult. Buying coverage young can help preserve insurability. Many juvenile whole life policies offer guaranteed purchase options (or add\u2011on riders) that let the insured buy additional coverage at certain ages or life events without new medical exams, and children\u2019s term riders on a parent\u2019s policy commonly allow conversion to permanent coverage (with defined maximums and timelines) without new underwriting (NAIC<\/a>; State Farm<\/a>). Evolving state rules and industry practices around the use of genetic information in underwriting are another reason some families value guaranteed insurability features (ACLI<\/a>).<\/p>\n\n\n\n

Provides coverage for death-related expenses<\/strong><\/p>\n\n\n\n

Since life insurance for children works the same as any other life insurance policy, a death benefit is paid out when the policyholder passes. This money can be used to cover costs like funeral expenses<\/a>, medical bills or counseling for the family. In the U.S., infant mortality was 5.60 per 1,000 live births in 2022 (CDC<\/a>); beyond infancy, annual death rates for ages 1\u201314 are very low (tens per 100,000) and dominated by unintentional injuries, with detailed age bands (1\u20134, 5\u20139, 10\u201314) available in CDC WISQARS<\/a>.<\/p>\n\n\n\n

Builds an asset<\/strong><\/h3>\n\n\n\n

Whole life insurance policies carry a cash value that builds over time. Guarantees are defined in the contract and supported by state nonforfeiture rules; many policies are \u201cparticipating\u201d and may pay non\u2011guaranteed dividends, though dividends can change and are not guaranteed (NAIC<\/a>; Insurance Information Institute<\/a>). Policyholders can usually access value through loans or surrender, subject to tax and benefit implications (FINRA<\/a>; IRS Pub. 525<\/a>). Major mutual insurers regularly announce dividends but explicitly note they are not guaranteed (example announcement<\/a>).<\/p>\n\n\n\n

Cons of buying life insurance for children<\/strong><\/h2>\n\n\n\n

May be better investment and savings options<\/strong><\/h3>\n\n\n\n

Thankfully, the statistical likelihood of your child passing away<\/a> is quite low\u2014especially beyond the first year of life, when unintentional injuries become the leading cause for school\u2011age groups (CDC WISQARS<\/a>). If your main goal is building savings for education or a \u201claunch fund,\u201d dedicated accounts usually offer clearer tax benefits and flexibility: 529 plans grow tax\u2011deferred and are tax\u2011free for qualified education expenses; starting in 2024, you can roll unused 529 funds to the beneficiary\u2019s Roth IRA within strict limits (lifetime cap $35,000, the 529 must be open \u226515 years, annual IRA contribution limits apply, and recent contributions\/earnings within the last 5 years can\u2019t be rolled) (IRS Pub. 970<\/a>; IRS Topic No. 313<\/a>). For broader goals, a custodial UGMA\/UTMA brokerage provides flexibility but assets irrevocably belong to the child and may be subject to the kiddie tax and financial\u2011aid impacts (FINRA<\/a>). Teens with earned income can use a custodial Roth IRA, subject to annual IRA limits (IRS 2025 limits<\/a>).<\/p>\n\n\n\n

For short\u2011term or conservative needs, insured cash vehicles and inflation\u2011linked bonds are competitive in the current rate environment: high\u2011yield savings accounts and top CDs have recently offered mid\u2011single\u2011digit APYs (check current rates), with FDIC insurance up to $250,000 per depositor, per bank, per ownership category (Bankrate savings rates<\/a>; Bankrate CD rates<\/a>; FDIC<\/a>). U.S. Series I Savings Bonds add inflation protection but have constraints: must be held at least 12 months, a three\u2011month interest penalty if redeemed within five years, and annual purchase limits of $10,000 per SSN electronically (plus up to $5,000 via tax refund) (TreasuryDirect<\/a>). For long\u2011run market exposure, major asset managers\u2019 10\u2011year outlooks call for single\u2011digit equity and mid\u2011single\u2011digit high\u2011quality bond returns, reinforcing the value of diversified, low\u2011cost portfolios (Vanguard 2025 outlook<\/a>).<\/p>\n\n\n\n

Fees<\/strong><\/h3>\n\n\n\n

Life insurance policies come with quite a few fees that can eat away at the value of your investment. In whole life, costs are embedded in the level premium (policy expenses, cost of insurance, commissions), which is why early cash values are low and surrender values may be less than premiums paid for many years. Paying premiums more frequently than annually usually increases the total yearly cost due to modal charges (NAIC Life Insurance Buyer\u2019s Guide<\/a>). By contrast, low\u2011cost index funds in a 529 or custodial account make fees visible and typically lower.<\/p>\n\n\n\n

Ideally, it all depends on what your goals with the policy are. If you are truly looking for coverage in case your child passes, you may need to deal with the fees. But if the primary objective is savings, consider whether transparent, tax\u2011advantaged vehicles (e.g., 529s, Roth IRAs for working teens) or FDIC\u2011insured cash\/CDs and I Bonds better fit your time horizon and liquidity needs (IRS Topic No. 313<\/a>; TreasuryDirect<\/a>).<\/p>\n\n\n\n

Premiums<\/strong><\/h3>\n\n\n\n

If your child wants to keep the policy after they move out, someone will have to keep paying the premiums. While there are options to cash\u2011in a whole life insurance policy, surrendering early can return less than premiums paid. Public carrier materials show how costs scale: entry prices for juvenile whole life often start around $2.17\u2013$3.27 per month for about $5,000 of coverage at the youngest ages, with typical standalone coverage amounts ranging from $5,000 to $50,000 and premiums guaranteed level for life (Globe Life<\/a>; Gerber Life<\/a>; Mutual of Omaha<\/a>). Children\u2019s term riders on a parent\u2019s policy can provide up to about $20,000\u2013$25,000 per child under one rider charge with conversion rights to permanent coverage later (State Farm<\/a>).<\/p>\n\n\n\n

Alternative to children\u2019s life insurance<\/strong><\/h2>\n\n\n\n

Choosing to start investing in your child\u2019s financial future at a young age is a fantastic idea. However, there may be better options than child life insurance. You could take the money that you were going to pay premiums with and invest it in a savings account, investment account, certificate of deposit or any other value-building asset. For education goals, a 529 plan offers federal tax\u2011free withdrawals for qualified expenses and, beginning in 2024, limited rollovers to the beneficiary\u2019s Roth IRA (lifetime cap $35,000; the 529 must be open \u226515 years; annual IRA limits apply; no rollovers of contributions\/earnings from the last 5 years) (IRS Topic No. 313<\/a>; IRS Pub. 970<\/a>). For flexible, non\u2011education goals, a custodial UGMA\/UTMA account keeps funds available for any purpose for the child but transfers control at the age of majority and may trigger the kiddie tax on unearned income (FINRA<\/a>; SEC Investor.gov<\/a>). High\u2011yield savings and CDs provide principal stability (FDIC\u2011insured); I Bonds add inflation linkage but have a 12\u2011month lock and annual purchase limits (FDIC<\/a>; Bankrate<\/a>; Bankrate<\/a>; TreasuryDirect<\/a>).<\/p>\n\n\n\n

Additionally, you could use these investments to start teaching your children about money, savings and growth as they get older. Research\u2011backed practices include developmentally appropriate, hands\u2011on activities\u2014e.g., save\u2011spend\u2011share jars in early childhood, opening a youth savings account and comparison shopping in upper elementary, and using an investing simulation before real money in middle school\/high school. Tie lessons to real decisions (first paycheck, payment apps), emphasize low\u2011cost diversified investing, and practice digital safety together (OECD PISA 2022<\/a>; CFPB youth framework<\/a>; SEC Investor.gov<\/a>; FTC online privacy<\/a>).<\/p>\n\n\n\n

The bottom line<\/strong><\/h2>\n\n\n\n

Whether life insurance for kids is a good idea or not is highly debated by parents, financial planners, and people in the insurance industry. Some families value modest final\u2011expense coverage and guaranteed insurability features; others prioritize the very low probability of child death beyond infancy and the higher flexibility of savings\/investment accounts. In the U.S., under\u20115 mortality is about 6 per 1,000 live births (>99.4% survive to age 5), and school\u2011age mortality is extremely small and largely due to preventable injuries (World Bank\/UN IGME<\/a>; CDC WISQARS<\/a>). A practical approach is to right\u2011size term life on the adults first, consider a low\u2011cost children\u2019s term rider if you want modest coverage with conversion rights, and direct most dollars to 529 plans (now with a Roth IRA rollover safety valve), custodial accounts, Roth IRAs for working teens, and insured cash\/I Bonds to build your child\u2019s future (IRS Pub. 970<\/a>; IRS Topic No. 313<\/a>; TreasuryDirect<\/a>).<\/p>\n","protected":false},"excerpt":{"rendered":"

While discussions about life insurance are more common as you get older, some people advocate for buying life insurance for children. Evidence shows the risk of a child dying in the U.S. is very low beyond infancy\u2014more than 99.4% of newborns typically survive to age 5 (under\u20115 mortality \u22486 per 1,000), and the 2022 U.S. […]<\/p>\n","protected":false},"author":345,"featured_media":350818,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1270],"tags":[],"post_author":[],"yoast_head":"\nLife Insurance for Children - Reviews.com<\/title>\n<meta name=\"description\" content=\"A guide to Life Insurance for Children\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.reviews.com\/insurance\/life\/for-children\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Life Insurance for Children - Reviews.com\" \/>\n<meta property=\"og:description\" content=\"A guide to Life Insurance for Children\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.reviews.com\/insurance\/life\/for-children\/\" \/>\n<meta property=\"og:site_name\" content=\"Reviews.com\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Reviewscom\/\" \/>\n<meta property=\"article:published_time\" content=\"2025-11-07T18:14:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.reviews.com\/wp-content\/uploads\/2020\/07\/Child-Life-Insurance-1193455171.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1440\" \/>\n\t<meta property=\"og:image:height\" content=\"958\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Reviews Staff\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Reviews\" \/>\n<meta name=\"twitter:site\" content=\"@Reviews\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Reviews Staff\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"8 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.reviews.com\/insurance\/life\/for-children\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.reviews.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Life Insurance for Children\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.reviews.com\/#website\",\"url\":\"https:\/\/www.reviews.com\/\",\"name\":\"Reviews.com\",\"description\":\"Your Guide to the Best Services\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.reviews.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Life Insurance for Children - 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