The very thought of losing a child is devastating for parents, grandparents, and guardians. However, depending on your family’s health and financial circumstances, life insurance for children could help in an incredibly challenging time.

Not every child needs life insurance, but if your family has a history of genetic conditions or if your child is dealing with a severe illness, it could make sense for you. Considering the worst-case scenario is incredibly difficult, but knowing the facts about life insurance for children can make the conversation easier.

What is child life insurance?

Child life insurance refers to any policy a parent, grandparent, or guardian takes out for a child under 18. The policy offers a child’s loved ones financial support should that child ever pass away, even into adulthood.

How does life insurance for children work?

Like a life insurance policy for adults, life insurance for children provides financial security in the form of a death benefit if a child passes away while the policy is in force. Beneficiaries will receive a lump sum payment to help with funeral expenses, allow loved ones to take time away from work, or use any way the family sees fit.

Parents or guardians act as policyholders for a child’s life insurance until they decide to transfer the policy over to the child. In some cases, the policy automatically changes hands when the insured child reaches a certain age. Typically, parents and guardians are listed as the beneficiaries of the death benefit in addition to being the policyholders.

Some providers offer standalone life insurance policies for children. Although Fidelity Life doesn’t offer a standalone children’s life insurance policy, we offer a child life insurance rider that can provide coverage for kids as an add-on to their parent’s life insurance policy.

Is children’s life insurance different than a child life insurance rider?

Both children’s life insurance and child life insurance riders offer life insurance coverage for children and a death benefit if they pass away. However, key differences set them apart. While children’s life insurance stands alone as a distinct policy, riders supplement existing life insurance policies to expand coverage.

As you apply for your own life insurance policy, you may add a child life insurance rider to provide your kids with coverage. However, that rider expires once your kids reach young adulthood or once your policy term ends (whichever comes first). If children wish to extend the coverage, Fidelity Life allows children to convert their life insurance riders into permanent policies when they turn 23 or the policy expires, whichever happens first.

What does child life insurance cover?

If the unthinkable happens, child life insurance can cover expenses so your family can focus on grieving and healing. A life insurance policy can cover medical bills or safeguard you and your loved ones from scrambling to afford a funeral, especially considering the average funeral cost in the United States is around $9000. The death benefit can cover that cost and related expenses like memorials, religious ceremonies, cremations or burials, and travel. The life insurance policy could also replace your income, allowing you to take time away from work.

What is the cost of child life insurance?

The cost of children’s life insurance depends on how much coverage you want and your child’s age. You’ll typically pay more expensive premiums if you choose an option with a higher death benefit. Overall, insurance for a child typically costs less than insuring an adult. Nevertheless, the cost of life insurance goes up with age. The best way to determine the potential cost of children’s life insurance is to contact a licensed insurance agent.

Pros and cons of buying life insurance for children

Understanding the benefits and drawbacks of purchasing life insurance for kids can help you make the best decision for your family.

Pros

• You can secure lower premiums. Children’s life insurance usually comes at a relatively low cost. Most insurers offer stable premiums, so the price of your child’s policy won’t go up over time.
• Some standalone policies accumulate cash value. Depending on their policy, your child can borrow or withdraw from their life insurance policy’s cash value to cover emergencies or major expenses throughout their life.
• Children’s life insurance has a simple application process. Your child won’t have to undergo a medical exam or answer medical questions to receive coverage.
• Life insurance for a child guarantees their future insurability. Qualifying for life insurance becomes more difficult as a person ages or develops health issues. Children’s life insurance can ensure your child can retain coverage even as their life and health change. Some policies even allow people to increase their coverage without undergoing a medical exam as they enter adulthood.

Cons

• Children’s life insurance policies have lower coverage limits. As your child ages, they’ll likely have to take out additional life insurance to replace income and protect their family’s finances.
• Children’s life insurance is a long-term commitment. Policyholders have to pay premiums for many decades to maintain coverage. If your family ever has to tighten the budget, premiums could cause unwanted financial strain.
• Other investments may better fit your needs. Financial institutions offer parents and guardians a wide range of savings accounts for their children. The money you spend on life insurance could go further for your family elsewhere if it aligns with your financial priorities.

Should you buy life insurance for your kids?

Whether or not to buy life insurance for children depends on your family’s unique needs and financial situation. In some circumstances, life insurance for children may be worthwhile.

For example, a life insurance policy could offer your family protection if your child develops a terminal illness. That way, you don’t have to experience the stress of paying for a funeral while navigating a crushing loss. Alternatively, if your family’s medical history includes genetic conditions or your child has a chronic illness, they may have difficulty qualifying for life insurance as adults. Investing in a policy while they’re young can offer them an option for lasting coverage.

It’s usually a good idea to take out your own life insurance policy before buying one for your child. That way, you can ensure they can meet their needs if anything happens to you. A child life insurance rider can be a way to have the best of both worlds. If you purchase a RAPIDecision® Life term policy from Fidelity Life, you could get an additional benefit for your child that ranges from $5,000 – $25,000 simply by adding the child life insurance rider.

Explore life insurance options that work for your family

Every family’s health and financial circumstances differ. So, too, do their life insurance needs. Thinking about the loss of a child is never easy. But planning for the future can safeguard your family’s finances, so you can focus instead on spending time together. While Fidelity Life does not offer children’s life insurance, a licensed insurance agent can help you understand your options and explain how a child life insurance rider can work seamlessly alongside your term life policy. Give us a call or get a quote today to get started.