Child Life Insurance: Weighing the Advantages and Disadvantages

Apr 24, 2024

Life Insurance

benefits and drawbacks of life insurance for child

Life insurance is often associated with adults, but some parents choose to purchase life insurance policies for their children. Let's explore the concept of child life insurance, including what it entails, how it works, and the pros and cons of this financial decision. By weighing the advantages and disadvantages, parents can make an informed choice about whether child life insurance is suitable for their family.

What Is Life Insurance for a Child?

Child life insurance, also known as juvenile life insurance, is a type of life insurance policy that provides coverage for a child's life. These policies typically offer a death benefit payout if the child passes away during the policy term. Some child life insurance policies also include a cash value component that accumulates over time, providing a savings or investment component.

What to Know About Buying Life Insurance That Covers Kids?

When purchasing life insurance for a child, it's essential to understand the terms and features of the policy. Parents should consider factors such as the coverage amount, premium costs, policy duration, and any additional benefits or riders offered by the insurer. Additionally, parents should be aware of the potential tax implications and estate planning considerations associated with child life insurance.

What's Needed To Buy Life Insurance for a Child?

To buy life insurance for a child, parents typically need to provide basic information about the child, such as their name, date of birth, and health history. Depending on the insurer and the policy type, parents may need to undergo a medical underwriting process or provide consent for the child to undergo a medical exam.

The Cost of Insuring a Child

The cost of child life insurance can vary depending on factors such as the child's age, health status, coverage amount, and the type of policy selected. Generally, premiums for child life insurance policies are lower than those for adult policies, making it a relatively affordable option for parents.

Pros of Buying Life Insurance for a Child

The advantages are -

  1. Financial protection: Child life insurance provides a death benefit payout that can help cover funeral expenses and other financial obligations in the event of a child's death.

  2. Guaranteed insurability: Some child life insurance policies include options to convert the policy into a permanent life insurance policy later in life, regardless of the child's health status.

  3. Cash value accumulation: Certain child life insurance policies accumulate cash value over time, which can be accessed for various purposes, such as college expenses or a down payment on a home.

Cons of Buying Life Insurance for a Child

The disadvantages are -

  1. Low likelihood of death: The primary purpose of life insurance is to provide financial protection in the event of death. Since children are statistically less likely to pass away than adults, some argue that child life insurance may not be necessary.

  2. Opportunity cost: The premiums paid for child life insurance could be invested in other financial vehicles, such as college savings accounts or retirement funds, which may offer higher returns.

  3. Emotional considerations: Some parents may find it emotionally challenging to contemplate the possibility of their child's death and may prefer to allocate their resources toward other financial priorities.

Alternatives To Buying Life Insurance for Kids

Instead of purchasing child life insurance, parents may consider alternative options for protecting their children financially, such as investing in a college savings plan (e.g., 529 plan), setting up a custodial account, or purchasing additional coverage under their own life insurance policy.

Purchase Reliable Life Insurance for Children with Spotlight Insurance Agency

Deciding whether to purchase life insurance for your child is a significant financial decision that requires careful consideration. Spotlight Insurance Agency can help you determine the best approach to protecting your family's financial future. Contact us today to discuss your options, or call us at 720-923-1500 for further assistance.


  1. Is child life insurance a good investment?

    Child life insurance can provide financial protection and savings benefits, but it is essential to weigh the costs and benefits carefully.

  2. Can I purchase life insurance for my grandchild?

    Grandparents can typically purchase life insurance for their grandchildren but may need the child's parents' consent or involvement.

  3. What happens to the cash value of a child's life insurance policy if it's not used?

    A child life insurance policy's cash value continues to accumulate over time. The policyholder or beneficiary can access it for various purposes, even if the child outlives the policy term.

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