Planning for the Future: Life Insurance for Children

Underwritten by United of Omaha Life Insurance Company

09.24.2026 | ~ 9 min read

What is life insurance for children?

Life insurance for kids is lifelong coverage purchased early in life that remains in place as the child grows into adulthood. It’s a way for you to help protect your loved ones at all stages of their life, no matter what kind of curveball life throws. A parent or grandparent can purchase this life insurance policy in the name of their child or grandchild.

You can buy life insurance for children from when they are 14 days old until they turn 17 years old. Plans can help take care of expenses in the case of the child’s death, but they can also provide other benefits. For instance, your loved one can cash it in after their 18th or 21st birthday, depending on the insurance plan, and use the cash value for something important to them, such as helping pay for part of their dream wedding or a down payment on their first home.

Life insurance for children policies are typically whole life insurance policies. They build cash value over time and have guaranteed premiums that do not increase.

Benefits of life insurance for kids

There are several benefits to life insurance for kids. Let's look at some common ones.

It helps cover expenses in the event of a child’s death

If tragedy occurs, the policy helps cover funeral expenses and medical bills. Parents can even use the funds to help cover expenses if they take time off work and take care of their family during such a difficult time.
It ensures the child has some coverage later in life, no matter their health

No one knows what the future brings, and if your child or grandchild develops a medical problem, life insurance coverage may be harder for them to get later. When you get children’s whole life insurance before any medical problems appear, you can help ensure your loved ones have some coverage before they no longer qualify. Life insurance for children also allows them to qualify for additional coverage later in life, regardless of age or risk factors. Keep in mind: additional coverage generally relates to the amount of child life insurance you already purchased and may not be completely adequate later in life.
It’s a resource a child can borrow against to help fund a dream

Life insurance for children can build cash value over time. The longer you have the plan, the more they have to borrow against. Your loved one can dip into this to pay for costs related to a wedding or college tuition, for example*. However, borrowing from a permanent life insurance policy will reduce the death benefit from the life insurance portion of the policy**.
It makes a lasting gift

When you purchase children's whole life insurance for a loved one, you leave a lasting gift. The gift can be some peace of mind in the event of a death and a possible leg up on your loved one’s goals if they use the cash value.
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How life insurance for kids fits into financial planning

There are several factors to consider when deciding whether child life insurance makes sense for your family. Looking at the bigger financial picture can help you determine how this type of coverage may fit into your overall plan.

Life insurance for kids may be best viewed as a financial tool, not a replacement for other coverage. If you do not yet have adequate life insurance for yourself or other earners in your household, purchasing a whole life policy for a child may not be a priority. Child life insurance is designed to help provide long-term protection, not the same level of income replacement that adult life insurance typically offers. While some policies may build cash value over time, accessing that value should be carefully considered. Using the policy’s cash value can reduce the death benefit, may have tax implications, and could affect the policy's performance over time. It’s important to understand these trade-offs before using the policy as a funding source.

Child life insurance also plays a different role than traditional savings or investment accounts. It does not earn interest in the same way that savings accounts, education plans, or market-based investments do. For families focused on growth or education funding, tools such as savings accounts, 529 plans, or other investments may be more appropriate.

The best approach is to evaluate your family’s insurance needs alongside your broader financial goals. Speaking with a licensed agent or producer can help you decide whether life insurance for children fits into your overall strategy.

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What life insurance for kids does not replace

Life insurance for kids can play a meaningful role in long-term planning, but it’s important to understand what it is and what it isn’t. These policies are designed to complement your family’s broader financial picture, not replace other essential forms of protection or savings.

It is not a substitute for parent life insurance

If you’re deciding where to prioritize insurance dollars, coverage for parents and primary earners should generally come first. Adult life insurance is designed to replace income, help cover ongoing household expenses, and help protect dependents if something happens to you. Life insurance for kids does not serve that same purpose and shouldn’t be purchased in place of adequate coverage for adults.
It is not designed for income replacement

Life insurance for kids typically comes with lower coverage amounts. While those funds can help with final expenses or provide some financial flexibility, they are not meant to replace lost income or support a household long term. This is one of the biggest differences between children’s policies and traditional adult life insurance.
It is not a high-growth investment tool

Although many whole life policies for children build cash value, life insurance for kids is not designed to compete with investment or savings accounts in terms of growth potential. The primary purpose of the policy is lifelong coverage, with cash value serving as a secondary feature rather than a primary investment strategy.

Important considerations before buying life insurance for kids

Before purchasing life insurance for kids, it's helpful to step back and review your overall financial situation. These considerations can help you decide whether a child's life insurance policy fits your family’s priorities.

1. Your own insurance coverage comes first

If you don’t yet have enough life insurance coverage for yourself or other income-earning adults in your household, that should usually be addressed first. Life insurance for kids works best when it’s layered on top of a solid foundation of adult life insurance, emergency savings, and basic financial protections.

2. Cash value use has trade-offs

Some families may be attracted to life insurance for kids because of the potential cash value. While that flexibility can be useful, it’s important to understand the trade-offs. Borrowing against a policy’s cash value can reduce the death benefit, affect how the policy performs over time, and may have tax implications depending on how the policy is used. This feature works best when approached thoughtfully and with a long-term mindset.

3. Growth is limited compared to other savings options

Life insurance for kids may not earn interest or investment returns in the same way that savings accounts, 529 education plans, or stock market-based investments do. If your main goal is saving for college or growing your money over time, other tools may be more effective. In many cases, child life insurance works best as a complement to those strategies, not a replacement.

Is life insurance for children the best plan for your family’s future?

Life insurance for kids can make sense for some families, but it isn’t the right choice for everyone. The key is understanding your personal goals and financial priorities.

It may make sense if you:

Already have adequate life insurance for adults in your household
Want to secure lifelong coverage early, regardless of future health
Are interested in adding a conservative, long-term planning tool
See value in providing a lasting financial gift

You may want to explore alternatives if:

You are still building emergency savings or adult life insurance coverage
You are primarily focused on college savings or investment growth
You need short-term financial flexibility rather than long-term protection

Ultimately, life insurance for kids can work best when it’s chosen intentionally and as part of a broader financial plan, not as a one-size-fits-all solution.

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Final thoughts: Planning ahead for what matters most

Planning for your family’s future often means balancing protection, flexibility, and long-term goals. Life insurance for kids can be one piece of that puzzle when used thoughtfully.

It provides lifelong coverage that begins early in life
It complements, rather than replaces, other financial tools
It works best alongside adult life insurance, savings and investments
It supports long-term planning with a family-first focus

Taking the time to understand your options and speak with a licensed agent or producer can help ensure you’re making informed decisions that support what matters most to you and your loved ones.

Frequently Asked Questions (FAQs)

What is life insurance for kids?

Life insurance for kids is a policy purchased by a parent or grandparent that provides coverage for a child and may build cash value over time.

At what age can you buy life insurance for a kid?

Most policies allow coverage to be purchased from as early as 14 days old through age 17.

Who can purchase life insurance for a child or grandchild?

A parent or grandparent typically purchases the policy on behalf of the child or grandchild.

What type of life insurance policies are available for kids?

Most life insurance for kids is offered as whole life insurance, providing permanent coverage with fixed premiums.

How does whole life insurance for children work?

Whole life insurance for children provides lifelong coverage, builds cash value over time and locks in premiums that do not increase as the child gets older.