Should You Buy Life Insurance for Your Child?

The very idea of buying life insurance for a child makes some people cringe.

Children, by their very nature, are energetic and full of life.

They are the face of the future.

It is impossible to imagine them not growing to adulthood, but unfortunately, sometimes children do die before reaching adulthood.

Should you buy life insurance for your child?


To answer this, there are a few variables to consider.

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Do you have enough money to pay for a funeral?

Funerals can run $5,000 to $10,000.  If your child died, would you be able to pay for the funeral or would it cause a financial hardship?  Being unable to afford a funeral would cause undue financial stress in addition to the immeasurable grief you would already be experiencing.

Would you be able to continue working if you lost a child?

child life insurance

Buying life insurance for a child is a hard subject to think about.

It is impossible to determine how you would react emotionally to the death of your child until it happens.

However, do you think you may be incapacitated by the grief?  Would you be able to pick up every day and go to work, or would you simply have trouble getting out of bed?

A life insurance policy could afford you some freedom to deal with your grief and take some time off work.  If you have other children, they might need you home more often in the months after a child’s death.

Will you be able to survive financially on your own if you and your spouse separate or divorce?

Just as no one wants to imagine a child dying, you also don’t want to imagine getting a divorce because of a child’s death.  Yet, some studies argue that couples are more likely to divorce after the death of a child.

If that were to happen to you and your spouse, would you have enough money to survive on your own with your other children until you were able to resume a normal lifestyle?

Would you like to protect your child in the case of childhood diseases?

If you cover your child with a term life insurance policy and then they are later diagnosed with a disease or illness, you have afforded them a level of protection.  Someone who has had cancer or another disease as a child will find it very difficult to buy life insurance at a later date.  They will at least be covered by the life insurance policy you bought for them when they were children.

Not every parent will find it necessary to buy life insurance for their child, and thankfully, even if parents do purchase life insurance for their child, the chances of actually having to use it are very slim.  Still, don’t rule out the idea; consider all of the variables carefully before deciding if you should buy it or not.

What do you think of buying life insurance for a child?

Photo by Dawn Huczek

About Melissa

Melissa blogs at Mom's Plans about learning to live a fulfilling life on less. She has quit her day job and now blogs and writes, in addition to taking care of her three kids.

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  1. The most powerful argument that I’ve heard, in favor of buying life insurance for your kid, happened when someone told me that if their child died, there’s no way on earth they’d manage to pull themselves into work and be productive. In their own words, they said they’d probably sit on the couch eating ice cream straight from the tub for six months. The insurance would pay for their therapy.

    That’s a very solid reason, if I’ve ever heard one.

  2. It is too bad that my husband’s parents didn’t buy him a life insurance policy when he was a kid. He has a minor liver disease that makes it difficult for him to get insurance. It would have been easier when he was a kid as the disease probably wasn’t active yet and he was in much better health all around.

  3. I guess it’s good enough that my child will be designated as the beneficiary for insurance. That’s the way it usually happens so I guess I want to think and deal with it the same way.

  4. Many times I considered purchasing life insurance for my son. I always bought the school offered plan anually, but knew I he would be better served in future if I purchased a term life plan. He just turned 18, and has been diagnosed with a Congenital Heart Defect. Now he cant get insurance… All I can say is I wish I had…

  5. Marianne is on the right track. While losing a child and coping afterward are tragic and very hard to manage even for the most pragnatic soul. The objective or financial planning reason to purchase insurance on your children is to “insure their insurability”. Not just illness, but vocation and avocation, may mean your children will find it hard to get insurance when they are adults. It’s also very affordable when children are younger.

    A small permanent policy, one with an accumulating cash value, is a gift of lifetime protection plus an asset that can be used to secure a mortgage or education debt, helping to establish a solid credit history in early adulthood.

  6. Although the points that you made were certainly valid, there are two new factors worthy of consideration:
    1. The cost of permanent life insurance is sky-rocketing. At this rate it is more than likely that your child will not be able to afford permanent life insurance when they have a family of their own. Unfortunately term insurance may be their only option. Term insurance at any age is a complete waste of money since it’s eventually cancelled by either the owner or the insurance company and all the premiums are lost. It does however benefit the banks in that it protects the banks’ mortgage.
    2. The Cadillac of life insurance policies is a permanent “Participating” Whole Life Insurance contract. These are unique life insurance contracts offered by only two companies in Canada. These contracts are the safest and simplest long term investment for any child. In the case of my child, the insurance company will pay her a compounding tax free dividend inside the contract during her whole life. She can use the capital to pay for school, buy her first home, or even as an added source of income when she’s an adult. Why should I believe they will pay her a dividend? One company hasn’t missed a dividend payment to their policy holders since 1936 and the other since the late 1800s. Additionally in today’s 0 interest rate world they are paying my daughter a 7.1% tax free dividend in 2012.

    • Michael,

      You are absolutley correct about the value of a Participating Whole Life Product. If your daughter is financially well off when she starts her own family it may be in her best interest to allow the policy to continue compounding those dividends. She could borrow against the policy in her retirement years or let it pay for final expenses such as a funeral and estate taxes. Many people who purchase a non-participating policy when they are young come to find out they do not have enough coverage for the cost of a funeral later in their life. That dividend allows the policy to at least keep up with inflation and even better it is tax sheltered.

      The one thing I will point out is that there are several Canadian Insurance companies all with great track records for paying a dividend that sell this product, not just two.

      Joseph Curry
      joseph@curryfinancial.ca

  7. I agree with Michael Lampel. I have bought the whole life insurance for my 2 sons since they were toddlers. For as little as $34 per month, they have a decent insurance coverage; I am sure they can afford to pay for it when they start their own family. I call it a good investment for my boys who are about 20 years old now.