Life insurance on your children is an interesting, and sometimes controversial, topic in insurance circles.
In this post, we’ll strip away the confusion to consider the benefits of life insurance on your children. That way you can decide whether you need this kind of protection in your family.
Since you can’t buy term life insurance on a minor, we’ll stick with children’s whole life insurance options. (You could get a child rider on your own term life policy to cover a child; we’ll get into that later.)
5 Best Life Insurance Providers for Children
First, here are the companies we suggest if you’re shopping for life insurance coverage for the children in your life:
Mutual of Omaha: Best All-Around
Very few leading insurers specialize in whole life policies for children but Mutual of Omaha fits this description.
Mutual checks a lot of boxes for child life insurance shoppers. Its policies provide:
- Affordable rates: You could get $10,000 in coverage for as low as $4 a month.
- Guaranteed insurability: Once you have a policy on your child, the child can get more coverage in the future without going through the underwriting process again — even if the child develops a serious medical condition.
- Easy access: Mutual of Omaha has an easy-to-use online application.
- Cash value: The policy can grow over time as an asset you can leverage later for college expenses or a down payment on a new car.
- Level premium & benefit: Premiums won’t change and the policy’s death benefit — up to $50,000 per child — is guaranteed.
- Financial strength: Mutual of Omaha has earned A+ financial strength ratings from A.M. Best.
You could buy a policy on a child from 2 weeks to 17 years old. Premiums for new coverage increase as the child ages.
Mutual of Omaha sets the standard for children’s whole life insurance.
Foresters Financial: Best for Larger Policies
Families who need a larger coverage amount — up to $75,000 — should consider joining Foresters Financial. Foresters is a fraternal organization that provides a variety of financial services to its members.
You’d need to join Foresters to buy coverage, but this is an easy qualification to meet. It’s not much different than joining a credit union for a better rate on an auto loan.
The main reason to buy this coverage is its larger coverage amount. Very few companies exceed $50,000 in coverage per child. Premiums run a bit higher than Mutual of Omaha’s, but they’re in the same ballpark across all age groups.
Like Mutual, Foresters writes coverage on children 17 and younger.
Globe Life: Best for Young Adult Children
Globe Life writes whole life coverage on children up to 24 years old.
Yes, 18 to 24-year-olds are adults who could buy their own policy, but some shoppers still want coverage on their young adult children, and Globe is their go-to provider.
These policies don’t exceed $30,000 in coverage, and while they resemble the coverage Mutual of Omaha provides, premiums often come in a little lower, especially for younger children.
Gerber Life: Best for Long-Term Coverage
Gerber Life Insurance has an interesting take on children’s life insurance. First, Gerber won’t sell policies to children younger than 15. But once the child reaches age 18, the coverage automatically doubles (when you choose the company’s Grow Up plan).
This could pay off if you buy while your child is young and then keep the policy throughout their childhood. Premiums cost more for Gerber’s policy, so this will pay off only if you keep the coverage past age 18.
This is a strong life insurance company which writes coverage up to $50,000 on children age 0 to 14. Gerber markets its Grow Up insurance plan as a substitute for a college-savings plan.
But while you could use the policy’s cash value to help pay for college, it shouldn’t be your only planning tool. Opening a 529 College Savings Plan would be a much better investment.
American Family Insurance: Best for Flexible Coverage
American Family Insurance offers auto, home, and even pet insurance along with life insurance, of course.
I included this life insurance company because of its flexibility. After buying the coverage, you could increase or decrease the death benefit.
Of course, additional coverage would mean higher premiums. This is an unusual feature for permanent life insurance for children.
You’d need to contact an agent directly to buy a policy since it doesn’t sell policies online.
Other Companies to Consider
Several additional companies sell whole life insurance policies on children, but they resemble the options above. If you’d like to compare life insurance quotes on coverage from additional providers, consider:
- Thrivent Financial: Open only to Christians
- Transamerica: Great company but no real online presence
- Protective: Good option for policies on 18-year-olds
- Physicians Mutual: Good option for smaller policies
Child Riders vs. Children’s Whole Life Insurance
Many great term life insurance plans offer child riders. Child riders add a small amount of coverage for your child to your term life insurance policy.
Child riders aren’t actual life insurance policies on the child. The coverage would expire when your term policy expires or when the child reaches 21 to 25 years of age, depending on the insurer.
Unlike children’s whole life insurance, a child rider offers only the death benefit which you could use on funeral expenses or any other costs if the worst happened and your child passed away.
Child riders don’t grow cash value or guarantee insurability after your child becomes an adult — unless your insurer lets you convert the child rider to a whole life insurance policy. You couldn’t cash out the child rider the way you can cash out a permanent life insurance policy.
If you want only a small death benefit for your child and don’t need the additional benefits of children’s whole life insurance, adding a child rider to your insurance plan will likely be your most affordable option.
A child rider of $10,000 may add only a couple dollars to the policyholder’s monthly premiums.
Alternatives to Life Insurance on Children
You’ll come across a lot of advice online that says you shouldn’t buy life insurance coverage for your children since they don’t support the family financially.
In many cases this is good advice, but we’ve been working with clients long enough to know blanket advice doesn’t fit every situation. You get to decide for yourself what kind of financial protection your loved ones need.
As you decide, keep in mind there are alternatives to life insurance coverage, such as:
- A Savings Account: If you can save and set aside $20,000 or $30,000, you may have the financial stability you’d need to weather a tragedy. In this case you may not need a life insurance payout on your child’s life.
- A 529 College Savings Account: These tax-advantaged college savings accounts, which resemble IRAs, can grow faster than cash value built into a life insurance policy. The savings vehicle built into life insurance can take decades to become a sizable asset. By itself, children’s whole life insurance won’t likely help you avoid needing student loans or other kinds of financial aid.
Additionally, some financial advisors think the idea of establishing insurability on a child is often unnecessary. They think the chances of a child developing medical conditions that limit their insurance options later in life are slim.
But that’s ultimately your decision as a parent. You may think differently about insurability if you have a family history of diabetes, heart disease, or other serious medical conditions.
Who Can Buy Life Insurance on a Minor?
A parent, grandparent, step-parent, or any legal guardian can buy a life insurance policy on a child. The child does not have to give consent to the policy owner or even be informed. It’s even possible for a grandparent to buy coverage on a grandchild without the parent’s consent.
This kind of coverage does not require a medical exam, and most companies require very little underwriting. Unlike life insurance for adults, most child policies don’t even differentiate between male and female applicants.
You would have to provide the child’s personal information including Social Security number to finalize coverage.
Do I Need Life Insurance for My Children?
Whether or not to buy life insurance on your child or grandchild is a personal choice. We don’t make this decision for clients, but we do encourage them to consider the best way to achieve the peace of mind they’re seeking — whether it’s provided by life insurance or something else.
In most cases, the benefits of a children’s whole life insurance policy can be better met with another financial product. However, we have advised clients to buy a policy to provide financial protection until they can make better arrangements.