Life Insurance for Children: What Parents Should Know

Let’s cut through the discomfort. When someone mentions life insurance for a child, most parents stiffen up. “I don’t want to think about that.” I get it. But here’s what the insurance agents won’t tell you right away: you’re not buying this for you. You’re buying it so your child has a financial foundation decades from now—whether you’re in the picture or not.

Here’s a number that stops most parents cold. The average funeral for a child costs between $7,000 and $10,000. According to the National Funeral Directors Association, that number climbs when you factor in cemetery costs. No family should be setting up a GoFundMe in the middle of the worst week of their lives. A small permanent policy covers that. End of story. That alone is reason enough for many families.

But the real value isn’t death—it’s life.

I sat across from a mom named Denise a few years ago. Her son, Marcus, was born healthy. She bought a $75,000 whole life policy when he was eight months old. Premium was $24 a month. Marcus grew up, played sports, got good grades. At 19, he was diagnosed with Type 1 diabetes. Suddenly, every insurance carrier deemed him “high risk.” Except the one that already had him locked in. Today, Marcus is 27, owns a home, and his life insurance—the policy his mom bought before he could walk—is helping him protect his own wife and daughter. That’s the part parents miss.

Permanent life insurance (whole life or guaranteed universal life) does two things. First, it locks in insurability. A healthy child today might develop asthma, anxiety, or a chronic condition at 16 that makes coverage unaffordable—or unavailable—later. Locking in a rate at six months old guarantees they won’t pay five or ten times more as an adult.

Second, it builds cash value. Every premium payment puts money into an account that grows tax-deferred. By the time your child turns 18, 25, or 30, that policy can hold tens of thousands in cash value they can borrow against. College tuition. A down payment. Seed money for a small business. And unlike a 529 plan, if they get a scholarship, you don’t get penalized for pulling the money out. It’s flexible. It’s theirs.

This isn’t an investment. You’ll get a better return in the stock market. But the stock market doesn’t guarantee your child’s insurability when they’re 24 and diagnosed with something unexpected. It doesn’t show up with a check at the worst possible moment.

Here’s what I tell every parent I work with: you’re not buying a policy. You’re buying a head start. You’re giving your adult child a financial tool they didn’t have to qualify for.

Don’t wait until a health scare makes the decision for you. Call a licensed independent agent today. Ask for a guaranteed permanent policy for your child. Get the quotes. Compare them. And then lock it in—because the best time to do this was the day they were born. The second best time is right now. Learn more about buying life insurance for your child.