Updated: November 18, 2019

Do I Need Life Insurance Plans for my Children?

Life insurance policies are available for children too. Read this guide to find out how to secure comprehensive cover for the whole family

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Tony Stevens

Author: Tony Stevens - Finance Expert

Updated: November 18, 2019

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.

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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.

Ask A Quick Question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in life insurance. Ask us a question and we'll get the best expert to help.

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Tony Stevens

Tony Stevens

Finance Expert

About the author

Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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