It is uncomfortable to think about life insurance coverage for children. However, parents should be aware of why it is a wise choice. Purchasing life insurance for kids offers financial benefits that will serve children as they grow.
If you are considering purchasing life insurance, work with a trusted agent. At Lake Region Insurance Agency, we offer a wide range of policy options to meet your needs. Call or visit our offices in Cokato, New London, and Willmar, MN, to get started.
We are proud to serve our clients in Greater Minnesota as independent agents. We can help you with all of your insurance needs, including life insurance for children.
What Is Life Insurance for Kids?

Individual life insurance for kids comes as a whole life policy. It is a permanent plan that can stay in place throughout their life, rather than only for a set term. It also has a cash value that typically grows over time.
A whole life policy has a set cost, such as $50,000. And it has a specified number of years to pay for the plan. The longer you stretch the payments, the lower the monthly premium. Some parents or grandparents choose to have a short payment time. This smaller window makes for higher premiums, but the owner can give the child a paid-off policy once he or she becomes an adult.
Adults can purchase the policies for children through an agent. And as the policy’s owner, they can transfer it to the child at any time.
A second option for parents who want life insurance for their children is to add a rider to their own policy. That is, if you, as the parent, have a term life insurance plan, you can ask your agent to add your kids to it.
Adding kids to your existing policy is very inexpensive but has more limited benefits. For example, it will not accrue any cash value.
What Do I Need To Know About Buying Kids’ Life Insurance?

Once the application is complete, an underwriter will review the paperwork. Generally, you can buy life insurance for kids if they are 17 years old or younger. Speak with an independent agent to get the best policy recommendation for your family.
Most parents and grandparents choose to transfer ownership once the child reaches adulthood. And some policies automatically shift to the child once they reach a certain age, usually 21 years old.
Why Would I Buy a Life Insurance Policy for a Child?

- Investment Vehicle – Many adults purchase life insurance plans for children because of the cash accrual. The younger the child, the higher the premium percentage that goes toward savings. The cash value grows over many years, and the policy owner may cash in or surrender the policy for payment at any point. There is often a surrender fee that applies. The child may choose to cash in their plan to have money available for things like college, their wedding, or a down payment for a home.
- Tax Benefit – There is a potential tax perk to the plans, as the cash value growth is tax-deferred. That is, the cash value does not count as income until the person withdraws it. Taxes apply only on withdrawals that exceed the premiums paid for the plan. It is best to speak with a tax advisor for specific advice about your circumstances.
- Lock In Insurability – When you buy a life insurance policy for a child, it ensures that they are insurable for their whole lives. Assuming they keep the policy active, they will not lose that level of coverage. This benefit is critical if they develop a medical condition that would make them uninsurable later in life. It also gives them coverage if they end up with a high-risk job or hobby as an adult. Many careers and hobbies make it difficult for people to get a policy.
- Funeral Expenses – Finally, the policy will provide funeral and burial coverage in the event of a child’s death. This benefit can alleviate an otherwise significant financial burden to families at the worst time of their life.
What You May Need to Consider Before Purchasing a Policy
It is important to look at your savings, budget, and allocation of investments before purchasing life insurance for kids. It is wise to meet with a financial advisor to look at your entire financial picture to know how much you can allocate toward additional insurance options.
Before you consider buying a life insurance policy for your child, be sure you have sufficient coverage for yourself. Protecting your family’s finances if you pass away needs to be the top priority. Once you have that in place, talk with your insurance agent about available plans for your children.
Let’s Discuss All of Your Life Insurance Options

Whether you need health, auto, home, or life insurance, we can find what you need. As independent agents, we do not have to rely on just one company. We can search through hundreds of policies to find the perfect fit for you.
Our friendly team will help you secure the right coverage and the peace of mind that it provides. Contact us for a free policy review and quote. You’ll be on your way to financial security for your family.