What is Child Life Insurance?

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Child life insurance (also referred to as juvenile life insurance) is a group of different types of insurance policies, including term, whole life and universal life, used for the needs of children and their caregivers. Many insurers issue these life insurance policies using the word "child" or "juvenile" in the policy.

How Does It Work?

Children's life insurance may cover a child for the rest of their life or for a specified term at lower rates while the child is younger and healthier.
Most plans are available to parents, legal guardians, and grandparents for children and grandchildren. Adopted children and stepchildren are also typically eligible.
Coverage is typically not dependent on a prior physical exam or agent visit. It is usually determined by filling out an application and answering questions about the child's health.
Newborns to 20-year-olds are typically eligible for juvenile life insurance, but that may vary by insurance company and state.
Coverage can be purchased for any legally insurable amount, but frequently starts at $5,000, and tops out at $50,000 depending on the insurance company. However, more flexible plans allow parents to increase coverage amounts while the policy is in-force and active.

Types of Child Life Insurance

Whole Life

Child whole life insurance functions like most other whole life insurance plans. The child gets insurance protection for his or her whole life, as long as the premiums are paid. By buying a child a whole life policy while they are young, it will typically lock in low premiums for the rest of their life. This type of policy also builds cash value on a tax deferred basis. Many companies pay policyholders a dividend that builds the cash value of the life insurance policy. The cash value accumulated in the policy can then be borrowed against by the child later on in life for any reason, although most companies note reasons such as to pay for education, a first car, or even a first home. However, keep in mind that insurance should never be purchased solely for accumulation purposes. Its primary purpose, in this case, is to give your child or grandchild life long insurance protection at a lower cost.

Universal Life

Child universal life functions like most other universal life plans. Similar to whole life, universal life gives the child or grandchild insurance protection for his or her entire life as long as the premiums are paid. Unlike whole life, child universal life premiums are "planned" based on term insurance rates and "projected" interest. Universal life interest accumulates in the policy's cash value at a variable interest rate. Because the interest rate on which the premium is based is variable (not fixed), a decrease in interest rates can result in higher premiums as the child getsolder. That's why some companies call universal life "flexible premium" or "adjustable premium" life insurance policies. While you can borrow against or withdraw universal life cash value for any reason, doing so will only increase the risk that your child or grandchild will pay higher premiums in the future. That's why you should never buy universal life solely for accumulation purposes.

Term

Term life insurance for a juvenile is the least expensive type of coverage. The policy is in effect for a fixed term or period of time ranging from 1 to 25 years depending on the insurance company. Child term insurance does not pay dividends nor does it accumulate cash value. The policy pays the beneficiary a fixed amount of money only if the child dies within the term of the policy. These policies in some cases may later be converted to whole life depending on policy provisions and insurance company.

Benefits of Child Life Insurance

Some policies provide guaranteed lifelong coverage to children as long as the premiums are paid.
Reduces the cost of insurance and insurability of the child as they mature to adults. This is particularly important if the child grows up and has health issues, a serious accident, or a hazardous occupation.
Helps parents and grandparents pay the high costs of funeral expenses if the life of their child or grandchild should happen to end early.
Some policies have tax deferred cash accumulation that the child could borrow against later in life for school expenses, a first home, or anything else. However, keep in mind that borrowing could have adverse effects on the child life insurance policy or premium so those potential effects should be thoroughly investigated before you borrow.

If you bought a life insurance policy for your minor child or grandchild, make sure you have the peace of mind that you did not overpay for the child's life insurance by using the form below to contact our law firm for a free evaluation of your policy.

Your Name:

Your Daytime Phone Number:

Your Evening Phone Number:

Your E-Mail:

What year did you purchase the policy?

What company is the policy through?

What state do you live in?

Do you have any questions or comments? (not required)