Children's Life Insurance

Minors under the age of 18 are ineligible for term life insurance coverage, so any policy written on the life of a minor will be a permanent policy of some kind.

Whole life and indexed universal life are the most common types of permanent life insurance that are used in children’s life insurance. Whole life is generally more conservative on the cash value side with more contractual guarantees.  Indexed universal life, or IUL, comes with more cash value growth potential with less contractual guarantees.

Since the main goal of a life insurance policy for a child is usually to grow cash value, the premium is usually set at whatever amount the person setting up the policy is comfortable contributing on behalf of the child. This amount generally ranges anywhere from $25 to $250/mo, and the policy is designed based on that recurring monthly premium. This premium will be paid indefinitely, first by the parent or grandparent who is setting up the policy, and then perhaps later by the adult child once they have reached an age that the policy owner is comfortable signing the policy over and allowing them to take ownership of it.

As the years pass and premiums are paid, cash value grows within the policy and can be accessed later in life through withdrawals and policy loans for whatever the child (or, by then, grown adult) may need it for. All the while, they are also protected with the permanent life insurance coverage that the policy simultaneously provides.

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