Life insurance for children works much like life insurance for adults: the policyholder pays premiums and the policy pays out to a beneficiary (in this case, a parent or guardian) if the insured passes away while the policy is active. Because most life insurance for kids is whole life, this coverage lasts their entire life.
These cases are rare, but you may benefit from buying life insurance on your child if:
- Your child has a health condition that will worsen as they age
- Based on family medical history, your child may develop a serious health condition early in life
- You or your loved ones rely on your child financially
If you need to insure your child’s life, it’s simpler and cheaper to add a child rider to your term life insurance policy. A child rider provides a death benefit if any of your children pass away without the complex investing component, and can be converted to a permanent policy in the future if your child needs lifelong coverage.
