For most families, no. Cover the parents first. A small policy on a child can still make sense if you want to pay for a funeral or lock in coverage the child can keep later.
Life insurance is mainly there to replace lost pay. A child does not earn a paycheck. So the Insurance Information Institute says there is no lost income when a child dies.
Experts say to spend your insurance money on the parents first. That means life and disability insurance for the people who earn the money. Losing a parent usually hurts a family's money far more.
There are still a few reasons people buy it. It can pay funeral costs, which can run to thousands of dollars. It can also lock in coverage in case the child gets sick later and cannot qualify.
You can often add kids to your own policy with a child rider. In New York, this rider covers your children with level term coverage. New babies and adopted kids can be added. Each child can later switch to a permanent policy with no health questions.
Some states cap how much you can buy on a young child. In New York, the cap for a child under 4 and a half is $50,000 or 25% of the coverage on the parent, whichever is more.
- Buy coverage on the parents first
- A child rider is often cheaper than a separate policy
- Check if the child can convert to a permanent policy later
- Ask what happens to the coverage when the child grows up
More questions
Can my child keep the policy as an adult?
Often yes. Some whole life plans move ownership to the child at age 21. A child rider may let the child switch to their own permanent policy without a health check.
Is it a good way to save for college?
It is not the main purpose. Life insurance is built to pay when someone dies. Compare it with other ways to save before you buy.
Should my kid be my beneficiary?
Be careful. Insurers will not pay money straight to a minor. The NAIC suggests a trust or your estate instead.
Words to know
- Child rider
- A rider that adds term life for your kids. They usually must be at least 14 days old, and coverage ends at 21 or 25.
- Level term
- Term insurance where the death benefit stays the same for the whole term.
- Rider
- An add on to a policy that changes what it covers. It can add benefits, lower them, or leave some things out.
