Here's a question that catches most parents off guard: should you buy life insurance for your kids? It sounds counterintuitive at first. After all, life insurance exists to replace lost income and protect dependents—and your children don't have either. But there's more to this decision than meets the eye, and it's worth understanding what you're actually buying before you dismiss the idea entirely.
Life insurance for children isn't really about the death benefit—it's about locking in their ability to get coverage later in life, no matter what happens. Think of it as insurance for your insurance. If your child develops diabetes, asthma, or any other chronic condition, they'll still have coverage. That's the pitch, anyway. But is it worth the cost? Let's break down what you need to know.
What Is Life Insurance for Children?
Life insurance for children is typically a whole life policy with a small death benefit, usually between $5,000 and $50,000. These policies are permanent, meaning they don't expire as long as you keep paying the premiums. Most policies cost between $10 and $30 per month, though you can often get coverage cheaper by adding a child rider to your own life insurance policy for about $5-$10 per month total.
The policies build cash value over time that grows tax-deferred. Your child can eventually borrow against this cash value or use it as collateral, though the growth rate is typically modest—certainly not what you'd get from a stock market investment. Most insurers will cover babies as young as 14 days old, and the younger your child is when you start the policy, the lower the premium will be for their entire life.
The Case for Buying Coverage
The strongest argument for children's life insurance is guaranteed future insurability. If your child develops a serious health condition—Type 1 diabetes, cancer, heart issues, mental health conditions—they'll still have this policy. Even better, most policies include options to purchase additional coverage as adults without any medical underwriting. That means if they want to buy more life insurance at 25, they can do it regardless of their health status.
This matters more if you have a family history of hereditary conditions. If heart disease, autoimmune disorders, or certain cancers run in your family, locking in your child's insurability while they're healthy makes more sense. You're essentially buying them the option to have life insurance coverage their entire lives, which could be invaluable if they're later denied coverage or offered only extremely expensive policies.
There's also the practical matter of final expenses. No parent wants to think about this, but if something did happen, funeral costs typically run $7,000-$12,000. Having a policy means you won't need to scramble for funds during the worst time of your life. Some parents find peace of mind worth the relatively small monthly cost.
The Case Against It
Here's what most financial advisors will tell you: your child doesn't need life insurance because they don't have anyone depending on their income. Life insurance exists to replace earnings and protect dependents. Your kids have neither. The monthly premiums—even just $15 or $20—could arguably be better spent on a 529 college savings plan or invested in an index fund that will grow substantially more over 18 years.
The cash value component sounds appealing, but whole life policies build cash value slowly, especially in the early years. If you're buying this as an investment vehicle or college savings tool, you'll likely be disappointed by the returns. The insurance company takes significant fees, and you'd generally do better with dedicated investment accounts that offer higher growth potential.
There's also the long-term commitment factor. You're potentially signing up for decades of premium payments. If the policy becomes unaffordable at some point, you might have to cancel it before your child is old enough to take over the payments—and then you've paid premiums for years with nothing to show for it. Plus, while health conditions can make insurance harder to get, they don't make it impossible. Many adults with chronic conditions can still get coverage, just at higher rates.
What About Child Riders on Your Policy?
If you already have life insurance, adding a child rider is worth considering. These riders typically cost $5-$10 per month and cover all your children with a smaller death benefit, usually $10,000-$25,000. It's a cheaper way to get the same guaranteed insurability benefit without committing to a standalone policy. Many riders also include the option for your child to convert the coverage to their own policy as an adult without a medical exam.
The downside? Child riders typically don't build cash value, and the coverage amount is fixed—you can't increase it over time. But if your primary goal is ensuring your kids can get life insurance as adults, a rider accomplishes that at a fraction of the cost.
How to Decide What's Right for Your Family
This decision ultimately comes down to your family's specific situation and priorities. Consider buying life insurance for your children if you have a strong family history of hereditary health conditions, if you have limited savings to cover final expenses, or if the peace of mind is worth the cost to you. It's also worth considering if you want to give your child the gift of guaranteed lifelong coverage at locked-in low rates.
Skip it if you're on a tight budget and the premiums would mean sacrificing other financial priorities like paying down debt or building an emergency fund. Also consider skipping it if you'd rather invest that money in higher-growth vehicles like 529 plans or index funds, or if you're comfortable with the statistical reality that most healthy children will qualify for affordable insurance as adults.
One middle-ground approach: add an inexpensive child rider to your existing policy now, and revisit the standalone policy question when your kids are older and you have a better sense of their health trajectory and your family's financial situation.
Next Steps
If you decide to move forward, start by checking with your current life insurance provider about adding a child rider—it's often the most cost-effective option. If you prefer a standalone policy, compare quotes from multiple insurers, paying attention to the guaranteed insurability options and conversion features. Make sure you understand the cash value growth projections and that you're comfortable with the long-term premium commitment.
Life insurance for children isn't a clear-cut yes or no decision. It's a small monthly cost that buys future flexibility and peace of mind—valuable for some families, unnecessary for others. Take time to weigh the pros and cons against your specific situation, and don't let anyone pressure you either way. Whether you buy coverage now or wait until your kids are adults shopping for their own policies, the most important thing is that you're thinking strategically about your family's long-term financial protection.
