Children's life insurance can create lifelong protection, future insurability and policy value that may still be there decades after childhood is over.
Adults often buy life insurance because someone depends financially on their income.
Children generally don't have that responsibility yet. So children's insurance is usually less about replacing income today and more about creating long-term protection and options.
Parents or grandparents can purchase permanent life insurance on a child, subject to the insurer's requirements.
Whole life is commonly used because it can provide permanent coverage, guaranteed premiums and cash value depending on the policy design.
Some policies may also include or allow future-purchase options that can help the insured obtain additional coverage later without going through the same medical underwriting process, subject to the rider terms.
Whole life insurance is permanent insurance designed to remain in place for the insured's lifetime, provided the policy requirements are met.
Participating whole life can also build guaranteed cash value and may receive non-guaranteed policyowner dividends.
Because the policy begins so early, it has potentially many decades to develop before the child reaches retirement age.
Today, your child may be healthy.
Decades from now they may develop diabetes, heart conditions, mental-health history or another medical issue that affects future insurance underwriting.
Some children's policies offer guaranteed-insurability or additional-purchase options that can provide the ability to obtain more coverage at specified times or life events without new medical evidence, subject to the rider terms.
That's not the same as guaranteeing every future insurance need. The amount, timing and conditions are defined by the contract.
Participating whole life is not a stock-market investment, and it should not replace a proper investment or education-savings plan.
But its contractual guaranteed cash value is not directly exposed to daily stock-market movements.
That can create a different kind of asset on the family's long-term balance sheet alongside market-based investments.
Parents are not the only people who buy life insurance for children.
Grandparents may use permanent insurance as one way of creating a long-term financial legacy for a grandchild.
Depending on ownership and insurer requirements, the policy may eventually be transferred so the child becomes responsible for it as an adult.
By then, the original gift may include permanent insurance, accumulated policy value and future options that began years earlier.
A child does not normally have income that needs replacing.
But parents may need to stop working, reduce hours, travel for treatment, arrange childcare for other children or spend significant time away from home.
Children's critical illness insurance can provide a lump-sum benefit if the child meets the definition of a covered condition and the policy requirements are satisfied.
That money can help give the family more flexibility during a period when their attention belongs somewhere else.
One is primarily about long-term permanent protection. The other is about financial flexibility if a serious illness happens.
Permanent life insurance designed to remain in place into adulthood and potentially for life.
A living benefit designed to provide financial flexibility if the child experiences a covered critical illness.
An RESP and children's life insurance have different jobs. Comparing them only by investment return misses the purpose of each.
An RESP is specifically designed to help save for post-secondary education and can qualify for government education savings incentives.
Whole life is first and foremost life insurance, with permanent coverage and policy values depending on the contract.
We first ask what you're trying to accomplish.
Is the priority future insurability? Permanent coverage? A long-term legacy? Critical illness protection? Or a combination?
Once the purpose is clear, we can compare policy structures, premium periods, guarantees, riders and trade-offs.
Children's insurance makes more sense once you understand the purpose behind the policy.
Tell us what you're hoping to accomplish — future insurability, lifelong coverage, legacy planning, critical illness protection or a combination. We'll help you understand the options and the trade-offs.
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