Life Insurance for Children and Grandchildren

What is children’s life insurance?

Children’s life insurance is a life insurance policy where a child is the insured person. Most standalone children’s policies are whole life insurance, sometimes called juvenile whole life.

Whole life is permanent coverage. It can last for the child’s whole life as long as the premiums are paid, and it builds cash value over time.

It isn’t burial insurance for a child. Final expense or burial insurance is coverage adults usually buy on themselves to pay for their own funeral and final bills.

Why parents and grandparents consider it

• Coverage that starts young. As long as the premiums are paid, the policy can stay in force for the child’s whole life.
• A premium set early. The two policies described below both say the premium won’t go up.
• A possible way to add coverage later. Some policies give the child a chance to buy more coverage as an adult. Not all do.
• A gift the child can take over. At some point, ownership can pass to the grandchild under the policy’s rules.

Who can apply?

It depends on the insurance company. Usually a parent, grandparent or legal guardian applies, pays the premiums and owns the policy.

Gerber Life, for example, says a child’s parent, grandparent or permanent legal guardian may apply for its Grow-Up Plan, and that a parent’s signature is needed only where required by law.

So a grandparent can apply for some children’s policies. Whether a parent or legal guardian also has to take part or sign depends on the insurance company and the law in your state. Ask before you apply.

Owner, insured and beneficiary

Role	What it means
Owner	Usually the adult who applies. Pays the premiums and controls the policy.
Insured	The child. The person the policy covers.
Beneficiary	Named by the owner. Receives the death benefit.

A children’s policy vs. a child rider

There are two common ways to cover a child:

• A child rider is an add-on to a parent’s own life insurance policy. It covers the children for a set period.
• A standalone children’s whole life policy is the child’s own policy. It can last for life and builds cash value.

Rider terms, like how much they pay and when they end, vary by insurance company, so read them closely.

How the premium works

With the two policies below, the premium is set when you buy and the companies say it won’t go up. Gerber says its premium is locked in as long as the required premiums are paid. Mutual of Omaha says its premiums are guaranteed not to increase.

What you pay depends on things like the child’s age, the amount of coverage and the insurance company. In general, the younger the child when the policy starts, the lower the premium.

Cash value: what it is and isn’t

Whole life policies build cash value over time. But it doesn’t work like a savings account.

• You usually get to it through a policy loan. Loans charge interest and can lower the cash value and the death benefit.
• You can also surrender (cancel) the policy for its available cash value. That ends the coverage.

Children’s life insurance isn’t built to be a college savings plan. If saving is the main goal, other options are designed for that.

What happens when the child grows up

The coverage can keep going for life as long as the premiums are paid.

Ownership rules depend on the policy. With Gerber, the adult who applies stays the owner until the child turns 21. Check each policy for when and how ownership changes.

Some policies also change at certain ages. Gerber’s Grow-Up Plan, for example, automatically doubles its coverage at age 18 (see below).

Options to buy more coverage later

This is a product feature, not something every children’s policy has.

• Gerber: Gerber says its Guaranteed Purchase Option Rider comes automatically with standard-issue Grow-Up policies. It gives the insured a chance to buy more coverage later, at standard adult rates for their age, without new medical underwriting based on health or occupation.
• Mutual of Omaha: Mutual’s materials describe a chance to add more coverage later. Ask for the details before you buy.

Two current examples

Product details can change and may vary by state, so check the current terms before you apply.

Gerber Life Grow-Up Plan

• Whole life insurance for children
• Issue ages 14 days through 14 years
• Coverage currently advertised from $5,000 to $50,000
• Coverage doubles automatically on the policy anniversary in the year the child turns 18, for policies issued in 2009 or later. The premium does not double. For example, a $25,000 policy becomes $50,000.
• Premium locked in as long as the required premiums are paid
• The adult who applies owns the policy until the child turns 21
• A parent, grandparent or permanent legal guardian may apply, with a parent’s signature where required by law
• No medical exam, but the application has health questions, so approval isn’t guaranteed
• Builds cash value, with the Guaranteed Purchase Option Rider on standard-issue policies

Mutual of Omaha children’s whole life

• Whole life insurance, underwritten by United of Omaha Life Insurance Company
• Issue ages 14 days through 17 years
• Permanent coverage with premiums guaranteed not to increase
• Builds cash value
• Mutual describes a chance to add more coverage later
• Mutual markets it for both children and grandchildren

What children’s life insurance is not

• It’s not burial insurance for a child in the way adults buy final expense coverage for themselves.
• It’s not a savings or college plan.
• It’s not a replacement for coverage on the parents or anyone else the family depends on.
• It’s not needed to pay off a child’s federal student loans. Federal student loans can generally be discharged when the borrower dies, so that isn’t a reason to buy it.

When it may not be the best use of money

• The adults aren’t covered yet. If the family depends on a parent’s income or care, that coverage usually comes first.
• The premium would strain the budget. You’ll likely be paying for many years.
• The goal is saving. Other options are built for saving and growth.

Questions to ask before you buy

• What ages can apply?
• Who can apply, and does a parent or legal guardian have to sign?
• Who owns the policy, and when does ownership move to the child?
• How much coverage is it, and what’s the monthly premium? Can the premium ever go up?
• Are there health questions?
• How does the cash value work, including loans and surrender?
• Is there an option to buy more coverage later? What are the rules?
• Which insurance company issues the policy?

Have questions about coverage for yourself or your family? Use the quote form on this page or call me at 888-862-9456.

Frequently asked questions

Can a grandparent buy life insurance on a grandchild?

On some policies, yes. Some children’s policies let a grandparent apply and own the policy. Whether a parent or legal guardian also has to sign depends on the insurance company and your state’s law.

Is children’s life insurance the same as burial insurance?

No. Children’s whole life is permanent coverage on a child. Burial or final expense insurance is coverage adults usually buy on themselves for their own final costs.

Does the coverage go up when the child turns 18?

Only on some policies. Gerber’s Grow-Up Plan doubles its coverage at age 18 for policies issued in 2009 or later, without doubling the premium. Not every children’s policy does this.

Sources

• Gerber Life, Grow-Up Plan and Grow-Up Plan questions
• Mutual of Omaha, Children’s Whole Life Insurance
• Code of Federal Regulations, 34 CFR 685.212 (loan discharge on the borrower’s death)