Best Ways to Get Life Insurance for Children

If you’re a new or expectant parent, protecting your child’s future is likely top of mind. While you’re focused on diapers, daycare, and saving for college, you might also find yourself wondering: is life insurance for children necessary? It’s a question that often sparks confusion—and strong opinions. After all, how do you insure a child’s future when their journey is just beginning?

In this article, SBLI breaks down the three main types of life insurance for children, explaining how each one works, when it might make sense, and what to consider as you plan for your family’s future. Keep reading for a clear, practical guide to protecting what matters most.

Why Do People Buy Life Insurance for Kids?

Many parents and grandparents explore life insurance options for children as a way to provide long-term security. But why do people buy life insurance for kids, especially when the risk of loss is so low at a young age? The answer lies in both emotional and practical motivations.

On the emotional side, some families find comfort in knowing they would have financial support in the event of a tragedy. Funeral costs and time off work can add up quickly, and insurance can ease that burden during a difficult time.

From a practical standpoint, one of the key benefits of purchasing life insurance for a child is locking in low premiums while they’re young and healthy. Once the policy is in place, their coverage can’t be denied or reduced—regardless of any changes in health later in life.

Parents who want to teach financial responsibility may also view a child’s life insurance policy as a long-term financial tool. Whole life policies, for example, accumulate cash value over time—funds that can potentially be accessed later in life for major expenses like education or a first home.

It’s important to note:

Policy loans will reduce both the net cash value and the net death benefit, and may be subject to interest. Unpaid loans may also be taxable as ordinary income and, if taken before age 59½, may incur a 10% federal tax penalty.
Withdrawals are also subject to ordinary income tax and may be subject to a 10% federal penalty if made prior to age 59½.

So why do people buy life insurance for kids? The reasons range from peace of mind to strategic planning. Understanding these motivations helps families decide whether purchasing life insurance for children fits into their broader financial goals.

Option 1 – Life Insurance with a Child Rider

A popular and affordable way to get coverage for children is through a Children’s Level Term Rider on a parent’s life insurance policy. A child rider is an add-on that provides coverage for dependent children under the same policy. Riders are available on term and whole life insurance plans and cover all eligible children in the household for one bundled cost.

Life insurance with child rider coverage usually ranges from $10,000 to $25,000 per child. It’s designed primarily to cover funeral expenses or provide temporary protection until the child is old enough to obtain their own policy. The biggest advantages are cost and convenience. Since it’s added to an existing policy, there’s no need to purchase a separate plan for each child, and premiums stay low.

One of the main benefits of this option is future convertibility. Many child riders can be converted into permanent life insurance policies without the child undergoing a medical exam. This benefit ensures that your child can maintain coverage even if they develop health conditions later.

SBLI’s Children’s Level Term Rider is a strong example. This option offers life insurance coverage for all eligible children under one rider, including biological and legally adopted children, from 15 days to 23 years of age. If desired, that coverage can be converted to an SBLI whole life policy.

However, there are some limitations. A child rider is only active while the parent’s policy is active, and coverage amounts are modest. Still, for families seeking basic protection at a low cost, it’s a solid first step in understanding the difference between child rider vs individual policy options.

Good to know:

The Children’s Level Term Rider must be added at the time the parent application is being submitted; it cannot be added to an existing policy. If the parent adds the rider in the future, they will need to reapply with the rider added on.
If the parent has the rider, and they have another child (or children) in the future, that child or children can be added to an existing rider.
The cost of the rider does not change based on how many children are being added – the cost is the same for one kid to four kids.

Option 2 – Whole Life Insurance for Children

Another route for families wanting to insure a child’s future is a standalone whole life insurance policy. Unlike a rider, this is a separate policy bought specifically for the child, offering coverage that lasts a lifetime with premiums that never increase.

Whole life insurance for children is often viewed as both a protection tool and a long-term financial asset. One of the key benefits is that it builds cash value over time, which the child may be able to borrow against later for major expenses like college tuition, a down payment on a home, or even starting a business. Because the policy is issued when the child is young and healthy, families can lock in a low rate that remains fixed for life.

Important to know:

Policy loans reduce both the net cash value and the death benefit and may be subject to interest. Unpaid loans may be taxable as ordinary income and, if taken before age 59½, may incur a 10% federal tax penalty.
Withdrawals are subject to ordinary income tax and may also incur a 10% federal penalty if made before age 59½.

Pros of Whole Life Insurance for Children

Locked-in premiums that never increase ¹
Cash value accumulation, which can be borrowed against in the future ²
Lifelong coverage that offers long-term financial protection—even if health issues develop later in life
A flexible product that can support education, home ownership, or future ventures

Cons of Whole Life Insurance for Children

Higher cost compared to a child rider or savings account
May not be necessary for healthy children with no known medical risks

Some grandparents purchase whole life policies for grandchildren as a gift that grows over time. Financially savvy parents may also use it as part of a broader estate or legacy planning strategy. While it’s not the right fit for every family, this type of policy offers lifelong coverage and financial flexibility.

If you’re weighing options between whole life insurance for children and other methods, consider how long you want the coverage to last and whether the cash value component aligns with your long-term goals.

Option 3 – Alternatives to Life Insurance

Life insurance isn’t the only way to plan for your child’s future. In fact, many families opt for financial tools that prioritize long-term growth and flexibility over insurance coverage. If your main goal is to build wealth or save for education, there are alternatives that may be a fit.

529 College Savings Plans

These tax-advantaged plans are specifically designed for education expenses.³ Contributions grow tax-deferred, and withdrawals for qualified educational costs are tax-free. 529 savings plans are a popular choice for families focused on funding college tuition without taking on debt.

Custodial Brokerage Accounts (UGMA/UTMA)

A custodial brokerage account allows adults to transfer assets to a minor.⁴ The money can be used for anything that benefits the child, not just education. The funds are taxed at the child’s tax rate and become fully accessible when the child reaches adulthood.

Term Life Insurance for Parents

Instead of insuring the child, some families protect the household income by purchasing term life insurance for the parents. This strategy ensures that if something happens to the parent, the child will still be financially supported. Term life can be a practical and cost-effective way to safeguard the family’s future.

When Are Alternatives a Better Fit?

If your main concern is financial growth or flexibility rather than coverage for rare situations, these savings and investment tools may provide greater long-term value. While not technically life insurance, they can play a key role in protecting your child’s financial future.

These alternatives often align more directly with the best life insurance for families, especially when combined with other financial planning strategies.

Child Rider vs. Individual Policy: Which One’s Better?

When comparing a Children’s Level Term Rider vs an individual Whole Life insurance policy, the best choice depends on your family’s goals, budget, and long-term intentions. Both options provide a form of life insurance for children, but they differ significantly in coverage, flexibility, and cost.

Child Rider – Pros and Cons

Here are the advantages and disadvantages you can expect from a child rider.

Pros:

Cost-effective: A rider typically adds only a few dollars a month to a parent’s policy.
Covers all eligible children under one rider.
Convertible: Many riders allow you to convert coverage into a permanent policy later.

Cons:

Coverage is limited, usually between $10,000 and $25,000.
Must be attached to the parent’s term or whole life policy.
Expires when the child reaches a certain age unless converted.

Individual Policy – Pros and Cons

If you choose a separate whole life policy for your kids, these are the benefits and drawbacks you can expect.

Pros:

Guaranteed lifetime coverage, regardless of future health for the amount you elect
Builds cash value over time.
Premiums stay locked in from the time of purchase.
Can be used for legacy or estate planning.

Cons:

More expensive than a rider.
May offer more coverage than needed for healthy children.

Which Should You Choose?

If you’re looking for basic, affordable coverage, a child rider is a great solution. If your goal is long-term financial planning or you want to leave a financial legacy, a standalone policy might be a better investment.

Those who are asking “Is child life insurance worth it?” must consider how they plan to use the policy in their broader financial strategy.

Is Child Life Insurance Worth It?

You’re not alone in asking, “Is child life insurance worth it?” The answer largely depends on your family’s situation, values, and financial goals.

On the emotional side, many parents see child life insurance as a way to protect against the unimaginable. On the practical side, the value comes from features like locked-in premiums, security, and cash value growth.

When It Makes Sense

You have a family history of medical conditions, and you want to secure coverage.
You’re financially stable and want to add life insurance as part of a broader investment or estate plan.
You’re a grandparent who wants to gift a lasting financial asset to a grandchild.

When It Might Not Be Necessary

You’re on a tight budget and need to prioritize adult life insurance or retirement savings.
You’d prefer to invest in savings plans that offer higher returns or broader use.
Child life insurance isn’t one-size-fits-all. Before deciding, it’s wise to speak with a licensed agent who can walk you through your options and help determine what’s right for your family.

Wrapping Up: How To Insure Your Child

Choosing the right form of life insurance for children depends on your family’s needs, budget, and long-term goals. Whether you prefer the affordability of a child rider or the investment potential of a whole life policy, the key is finding a plan that supports your financial vision. For some families, alternative savings tools may offer greater value.

Not sure how to protect your child’s future? Connect with one of SBLI’s licensed agents today at 800-650-4391 to schedule your personalized policy review. We’re here to help you secure your family’s financial future with confidence and ease.

Not all riders are available for all products. An Accelerated Death Benefit rider is automatically included and subject to an administrative expense charge upon acceleration. Other riders are available at an additional cost. Rider form series BC-40.1, 18-R-AXRDB, 18-R-AXDDB, BN-9, BN-50, BN-56, and 14-WOPR.

This is designed for general informational purposes on the subjects covered and is not intended to be legal, tax, or investment advice. Information regarding the subjects covered may not constitute the most up-to-date available and no representations are made that the content is error-free. Further, pursuant to IRS Circular 230, it cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You should consult your own legal, tax, or investment advisor regarding your personal situation.

SBLI Term Life Insurance policy form series B-56.
SBLI Whole Life Insurance policy form series: 21-P-PWL & 21-P-PSPWL.

¹ Loans will reduce your net cash value and net death benefit and may be subject to interest charges. Unpaid loans are subject to ordinary income tax and, if taken prior to age 59 1/2, a 10% federal tax penalty.
² Withdrawals are subject to ordinary income tax and, if taken prior to age 59 ½, a 10% federal penalty.
³ Investopedia, “529 Plan.”
⁴ Investopedia, “Custodial Account.”

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