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What is Children's Life Insurance?

Children's life insurance is permanent life insurance purchased for a minor/child by a parent or grandparent. Children's insurance offers your child lifelong insurance coverage and an attractive savings vehicle to meet their future financial goals.

The policy’s cash value accumulates, building savings that the insured child can use for any major expense down the road such as education needs or a down payment for their first car or first home.

A children’s life insurance policy is a flexible way to provide your child or grandchild with insurance coverage, a financial head start, and lifelong peace of mind should they choose to keep the policy in force.

How does child insurance work?

Children’s insurance is commonly a whole life insurance policy used to insure a child. This policy also has the additional features of liquidity and growth.

Children’s insurance is guaranteed to remain in force for the covered child’s entire life (including into adulthood) and can also generate cash dividends during the policy period (the child’s whole life). This provides your child with both lifelong insurance coverage and a head start on their financial savings and monetary goals.

Whole life insurance accrues a cash value, which the policyholder can withdraw from – like a savings account – or use as collateral for a loan from a financial institution.

Can you insure a child's life?

Not just anyone can set up life insurance for a child. The person purchasing the policy must have an insurable interest in the person insured. Generally, a parent, grandparent, or legal guardian are who would be the ones buying whole life insurance for a child.

Will my child need to do a medical exam to get coverage?

Your child is not required to do a medical exam or bloodwork to qualify for children's life insurance. The whole life policy ensures that children have lifelong coverage, while they are in good health and can benefit from the lowest premiums.

What is the age limit for child life insurance?

The age limits for child life insurance vary by type of coverage. Child term riders typically can be added for children until they reach between 21-25 years old depending on the insurance provider. Whole life insurance for children typically must be purchased before their 18th birthday.

Learn more about how children’s life insurance works

Do children need life insurance?

There are key benefits that prove the need for life insurance for a kid:

  • Lifelong coverage: Life insurance coverage never expires and protects a child for life
  • Lowest premiums: Locks in affordable premiums at a young age
  • Guaranteed insurability: Guarantee a child's future life insurance protection while they are in good health
  • Increasing coverage amount: One can reinvest policy dividends and grow the overall coverage value
  • Tax-sheltered growth: Cash value grows tax-free throughout a covered child's life
  • Paying for education: Access growing cash value to pay for college or university
  • Buying a house: The cash value can help fund a down-payment for a house or other capital needs
  • Leaving a legacy: It gives you the opportunity to build a tax-free gift for your children or grandchildren

Learn more about the pros and cons of children’s life insurance

Children's Life Insurance: Alternative to RESPs

Are RESPs better than children's insurance? This depends on your long term plans. While Registered Education Savings Plan contributions are matched by the government up to a maximum of $500 a year (and a $50,000 lifetime-limit), they have their limitations. For instance, an RESP may only be used only to fund education at an institution on the Designated Educational Institution List; if the child decides not to pursue an option from the list, any growth the savings account accrued may be forfeited.

Insurance for children provides both permanent insurance coverage as well as a financial plan. The savings and investment component of the whole life insurance policy can pay for college. The funds can be used for any financial need, be it at an educational facility of one’s choosing, a down payment for a home, capital for starting a business, or anything else to help a covered child build their life or livelihood.

Children's Insurance

 

RESP

  • Funds can be used for any purpose, such as education, a mortgage down payment, buying a vehicle, or starting a business
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  • Funds can only be used for education
  • Cash values can be accessed at any time
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  • Can only be accessed once enrolled in pre-approved educational program
  • Borrow against cash value of policy with no tax implications
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  • Taxed upon use by beneficiary
  • No maximum limits to coverage or cash value within policy
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  • Max lifetime contribution limit: $50,000
  • Generally lower volatility returns
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  • May be exposed to volatility depending on chosen investment plans
  • No matching government contribution
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  • Contributions matched by the federal government, up to $500 a year
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    How is a Child Term Rider different from children's life insurance?

    A children’s term insurance rider is an optional feature available for most life insurance policies that offers term insurance protection for the children of the insured at an additional cost. The child term rider offers no cash value, the coverage is not permanent, and the maximum death benefit is substantially lower (a maximum of $30,000 depending on the provider) than a standalone policy.

    A child rider must be added to the parent’s insurance policy when they apply for coverage and before the child turns 17. Child riders last until the child reaches a particular age (usually 25) or up to the time the parent turns 65 (whichever occurs first). It is possible to convert the rider into a permanent insurance policy between the insured child’s ages of 21 and 25.

    In contrast, children's permanent life insurance is a standalone insurance policy. It offers lifelong coverage, with access to an attractive cash value and can be purchased independently of a parent's policy.

    Which insurance is best for a child?

    With the above in mind, whole life insurance can be considered the best type of life insurance option for children, especially compared to a child term rider.

    Child term rider

     

    Whole life insurance for children

  • Dependent rider, added on to parent’s or legal guardian’s insurance policy
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  • Independent, individual insurance policy
  • Has to be added at the time of purchasing policy for a parent
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  • Can be purchased anytime before the age of 18
  • Must be purchased by parent or legal guardian
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  • Can be purchased by parent, grandparent, legal guardian
  • Has an expiry date based on either the age of the child (25 years) or the parent (65 years), whichever comes first
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  • Permanent coverage with no expiry date
  • Limited coverage amount, usually up to $30,000 max
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  • Larger possible coverage amounts are available
  • Coverage amount remains the same
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  • Coverage amount can increase with dividends from the policy
  • No cash value
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  • Accrues cash value
  • Premiums are paid over the lifetime of the policy
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  • Premiums can be paid within 10 or 20 years with no future liability to pay premiums
  • How much does children's life insurance cost?

    The cost of insurance quotes for children depends on several factors:

    • The age of the insured child when applying for coverage
    • The gender of the insured child
    • The coverage amount
    • The insurance provider
    • Whether it is participating or non-participating coverage
    • Premium payment period (lifepay or 20 year payment period)

    For example, a whole life policy for a three-year-old boy can have a monthly premium as low as $19 for $100,000 in coverage with premiums paid lifelong. Alternatively, $250,000 in coverage for a one-year-old girl could cost $97 for monthly insurance premiums if the Pay 20 option is chosen.

    Children’s Insurance Quotes

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    Frequently asked questions

    What are Canada’s children's life insurance companies?

    Canadian insurance providers like Industrial Alliance, Empire Life, and Equitable Life offer whole life insurance policies for children.

    Is children's life insurance worth it?

    Many parents and grandparents feel children’s life insurance is worth it because of the flexibility it offers through financial protection for the family and the potential for creating a sizable financial asset for the children.

    Children’s life insurance is a protection product, which provides a lump sum of tax-free cash should an insured child pass away. Parents can use this benefit for covering funeral costs, bereavement counselling, prior medical expenses, or to offer the ability to take time off to grieve.

    Child life insurance policies are worth it for several other reasons. For one, you are providing an avenue for guaranteed insurability and lifelong coverage for your children or grandchildren. If they contract a health condition that affects their future insurability, you still provide them with an affordable life insurance option they may not otherwise have had.

    Insurance for kids is also worth it as it provides an attractive savings vehicle with tax-advantaged growth and cash value they can access for future expenses, like education or making a down payment for a house. The sooner your child is covered by a whole life insurance policy, the longer (and faster!) the cash value component can grow and become an important part of their financial future.

    How much life insurance should I get for my child?

    How much life insurance your child or children need depends on many factors. These can include having the financial freedom to grieve the loss of a child and the repayment of any medical expenses incurred. On the other hand, one must also consider how much of a financial gift and cash value they want to set up for their children, and what options they want to provide for future insurability.

    A child's life insurance policy builds cash value and provides your child with lifelong coverage or a financial asset they can use for large purchases or expenses down the road.

    Will my child need to do a medical exam to get coverage?

    Your child is not required to do a medical exam or bloodwork to qualify for children's life insurance. The whole life policy ensures that children have lifelong coverage, while they have the best health and suffer from no medical conditions. Thus, as a child, they benefit from the lowest premiums they will ever have available to them.