Do I Need Life Insurance Plans for my Children?

Buying life insurance for children is often marketed to parents as a means to save money for their dependants and protect their insurability later in life.

However, the question of whether child life insurance is necessary sparks strong debate in the UK. Some advisors are of the opinion that life insurance for kids is a smart financial move, but others disagree.

If it’s something you’re considering arranging for your children, you’ve come to the right place.

Read on for a comprehensive overview or click the link and get the information you’re looking for:

What is life insurance for children?

In the UK, it isn’t possible for anybody under the age of 18 to take out any kind of contractual obligation – including life insurance. But as a parent or grandparent, you can do so on your child or grandchild’s behalf.

There are a number of specialist products available on the market, some of which cover both adults and their children or grandchildren. This insurance can be taken out alongside existing policies, or as a separate product.

Most child life insurance policies are whole life, which provide long-term “permanent” life cover.

Whole life policies covering child(ren) are available from many of insurance providers. Depending on the structure of the cover, you may be able to transfer ownership of the policy to the child once they become of age.

What is voluntary child life insurance?

Voluntary dependent life insurance is often made available through work as part of employer benefit plans. Dependent life insurance can cover any eligible dependants, including your child(ren) and spouse.

In the event of one of your covered dependants passing away, you would receive the policy’s “face value” as the death benefit, because you – as the employee – are automatically the designated beneficiary.

Why should I take out life insurance on a child?

As a parent, it’s your duty to ensure that your children are looked after.

So if you rely heavily on your income to support the family, you should consider the consequences if your income ceased altogether, or decreasing due to taking time off work to care for your child(ren).

There are arguments surrounding the importance of life insurance for children.

A few factors to consider include:

Guaranteed financial security later in life

The main reason parents or grandparents opt to take out child life insurance plans is because it gives them guaranteed financial security if you die – we’ll be covering this in more detail later on.

Funds funeral expenses and associated costs

In the tragic event of your child’s death, a life insurance payout could help contribute towards funeral costs, and/or other expenses such as family counselling and the general cost of living if you take time off work.

That being said, unless your child is born with a disability or other debilitating illness, the likelihood of them dying in the near future is slim – meaning the money could be put to better use elsewhere.

Life insurance for babies

Many people choose to take out protection when their kids are very young, because they’re guaranteed financial security in the event of their passing. This is one of the most common reasons people list their children on their life insurance policies.

However, some experts might point out to you that there are more financially viable options available to provide for your children’s’ future, because the risk of your child developing a serious illness early in life is fairly low. However, that’s not always the case…

Life insurance for kids with disabilities

If you’re the parent of a child with additional needs, you probably already have life insurance of your own to provide for your child when you die.

However, you should be aware that listing your child as the beneficiary of your policy could exempt them from receiving the government benefits they’d otherwise have been entitled to. To mitigate this, you could consider appointing a disability trust as your beneficiary. If this is a concern it’d be best to seek advice from a solicitor or other suitably qualified professional.

Whether you should consider insuring your child’s life too, in the event that you outlive your child, is a little more complicated. Yet buying life insurance on the life of your disabled child can be beneficial when you’re a carer.

As a carer of a child with disabilities, it’s likely you will have foregone career opportunities, you may also have seen your pension and life savings take a hit due to the nature of being a full-time carer.

Having a life insurance policy on your child could help with associated costs and give you a much-needed financial boost at a time when you’re grieving and unable to provide for yourself.

If you’re in this situation, there are people on hand to help offer advice, and it’s not a decision you need to make alone. We work with a team of qualified professionals who specialise in assisting people just like you – get in touch and we’ll match you with one of the experts we work with…

Speak to an expert for quotes and advice

If you wish to discuss any of the above in more detail, don’t hesitate to contact us. It’s important to assess your complete financial picture before committing to a decision with regards to children’s’ life insurance.

Get in touch for a free, no-obligation chat, and we’ll match you with one of the qualified financial advisors we work with.

All the experts we work with are independent advisors with whole-of-market access, they have the tools and experience to find a suitable insurance product for your needs.

Call us on 0808 189 0463 or fill in our online enquiry form and we’ll be in touch today.