Does a child need life insurance?
A child has no income to replace, so the usual reason for life insurance does not apply. Parents and grandparents buy it for other reasons:
- Guaranteed insurability. The child has coverage for life, and often the right to buy more as an adult, even if they later develop a condition that would make insurance expensive or unavailable.
- A low price fixed early. Permanent insurance bought in childhood costs far less per year than the same coverage bought at 30 or 40.
- Cash value. A permanent policy builds a cash value the child can use as an adult.
- Final expenses. It is hard to think about, and it is one of the things the coverage is for.
What it does not do
It is not the best way to save for education. A Registered Education Savings Plan, with its government grants, is built for that. And it should not come before the parents' own coverage. If a parent dies without enough insurance, the child's policy does not help the family. Cover the adults first.
What are the two types?
| Permanent policy for the child | Child rider on a parent's policy | |
|---|---|---|
| Lasts | For life | Until a set age, often 21 to 25 |
| Cost | Higher | Low, and often covers all children |
| Cash value | Yes | No |
| Later options | Child takes over the policy as an adult | Can usually be converted to the child's own policy |
A rider is the inexpensive way to have some coverage in place. A permanent policy is a long-term gift.
Who owns the policy?
A parent or grandparent applies, owns the policy and pays the premiums. Ownership can be transferred to the child when they are an adult. Some policies can be paid up in a fixed number of years, such as 10 or 20, so the child never has a premium to pay.
Common questions
How soon after birth can I insure a baby?
Most insurers accept applications once a newborn is a couple of weeks old. The exact minimum age varies by insurer.
Does my child need a medical exam?
No. The application asks health questions about the child. Insurers do not normally require an exam for children.
Can a grandparent buy the policy?
Yes. Grandparents often buy and pay for a policy, with the parents' consent.
What happens to the policy when my child grows up?
You can transfer ownership to them. They keep the coverage at the original price, and on many policies they can add more without health questions at set ages.
Sources
Written and reviewed by Sandeep Singh Pawar, licensed life insurance agent in Ontario. Last reviewed .