Life Insurance for Children: A Complete Guide

A father taking a photo of him, his wife and two sons

Buying life insurance for a child may not be at the top of a new parent’s agenda, but there are some benefits to taking out a children’s life insurance policy.

If the worst were to happen and your child either dies or suffers a critical illness, then the policy can payout to support you financially. If no claim is raised then your child may get access to better life insurance policies and terms later in life.

Children’s life insurance to cover death or serious illness

Life insurance policies for children can cover the funeral costs if your child dies during the term of the policy.

If your child is ill or has a serious medical condition then you may not be able to work while you are caring for them. Children’s life insurance would pay out to help you cover the cost of running the home – paying household bills, buying food, travel costs etc. – while you are not working.

In this sense life insurance for children works much like health insurance. Although it doesn’t specifically provide cover for medical treatment, you could choose to spend the payout on treatment.

What kind of life insurance is available for children?

The most common type of life insurance for children is known as ‘rider’ insurance – which is when you add your children to your own life insurance policy. It is also sometimes possible to add critical illness insurance to the policy to cover the child.

You also have the option of getting term life insurance for your child or children. With this type of policy, you pay a monthly premium to cover your child for a set period of time (usually between 5 to 10 years) or until they reach adulthood. If your child were to tragically pass away during the term of the policy then you would receive a pay-out.

As well as term life insurance, you could also get a whole of life insurance policy for your child. This provides cover throughout their life and means your child will always have cover in place – even if they develop medical conditions later in life that might otherwise exclude them from life insurance. This form of child life insurance is quite expensive – as premiums need to be paid throughout the child’s entire life – so is not a popular option.

How to choose the right life insurance for children

Before deciding on which type of life insurance to buy for your kids, ask yourself the below questions:

  • Who do you want to cover? You have a lot of options here – you can get cover just for yourself, or for you and your partner as a joint life insurance policy. Then you can add child life insurance to that policy.
  • How much of a pay-out will you need? If you are buying a policy solely to cover your child, then consider how much you would actually need to cover a funeral and/or medical costs. Also, be aware that pay-outs on many child life insurance plans are capped to around £25,000.
  • How long do you want to cover your child? The choice of policy term will depend on which insurer you choose, with most offering term life plans for children that last between 5 – 15 years.
  • Is your child eligible for life insurance cover? There are usually age restrictions attached to child life insurance, so for example you wouldn’t be able to add a child over the age of 21 to your policy. It may also be more difficult to get cover if your child has a pre-existing medical condition.