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What is life insurance for children?
Life insurance for children pays out a tax-free lump sum in the event of a child or children dying. The sum goes to named beneficiaries - usually the parents - and can be used in whichever way they think suitable. Many parents use the money to meet funeral expenses or to pay the mortgage or rent and the bills while they take time away from work.
Life cover for children applies to biological, legally adopted and step children. Some life insurance policies cover children from the day of their birth, while others start once your baby is 30 days old. The age that the child is covered until can vary from 16 to 23, although most policies cover a child until the age of 18 or, if they are in full-time education, 21.
What types of child life insurance policies are there?
There are three main types of child life insurance:
Set term life cover
This runs for a defined period, usually of between 5 and 10 years, and ends when the child reaches the specified age.
Life assurance
This is also known as whole of life insurance and lasts from childhood into adulthood and until death. However, this type of life cover for children is very expensive and, as with set term life insurance for children, is very rare.
Add-on or “rider” policies
This is the form that most life insurance cover for children takes. This is an add-on or a ‘rider’ on a life insurance for parents policy. This can apply to single or joint life cover.
How does life insurance for children work?
Each child is insured for a defined sum, which is usually a smaller amount than that covering any adults named on the policy. A payout can be made for each child (unlike joint life insurance for couples, which pays out only on the first death).
Life insurance for children is designed to give you breathing space at the time you need it. If you have to face the death of a child, you will need as much stability as possible in the following months and years. The lump sum payout enables parents to focus on each other and their surviving children, instead of worrying about how to pay the bills.
Is child life insurance the same as family income benefit?
No, child life insurance and family income benefit are different types of life insurance. Family income benefit is a type of term life insurance, but one which pays a monthly amount, rather than a lump sum, to your loved ones following a child’s death. Family income benefit is rare and only pays out for the remainder of the term; for example, if you died 18 years into a 20-year policy, the monthly income would only be paid for the remaining 2 years.
What else do I need to know about life cover for children?
As with all insurance policies, you have to be honest when you compare life cover quotes online and fill in the forms. This includes disclosing any family illness or hereditary conditions, otherwise you could risk invalidating your policy. When your son or daughter reaches the maximum age set out in the policy terms, it’s a good time to think about taking out life insurance for young people in their own name. They might assume they won’t need it in their late teens or early 20s but, the lower the age at which a policy starts, the cheaper the premiums tend to be for life.
Critical illness cover for children
You might also want to consider insurance for if your child falls ill or is injured. Critical illness cover pays out a lump sum if a person named on the policy is diagnosed with a serious illness or chronic condition. As with life cover, it’s difficult to get stand-alone critical illness cover for a child, with children commonly added to a parent’s policy instead. Many critical illness cover policies include children as standard, or they can be added to your existing policy for a small extra monthly cost. Similarly, family health insurance gives you peace of mind that you, your partner and children will get the care and treatment you need should you become unwell or be involved in an accident.
Do your children already have life insurance cover?
Children can usually be included in a family life insurance plan until they reach the age of 18. However, if they are in full-time education, this coverage may extend beyond that age. It's important to review your policy to ensure it provides the necessary level of coverage and to understand when coverage for children under family life insurance will cease.
Why compare children's life insurance with ActiveQuote?
Purchasing life insurance, especially for children, can feel overwhelming. We recognise the importance of finding the right coverage for you and your family, and we're here to support you every step of the way. While many of our policies are straightforward and can be conveniently purchased online, we prioritise exceptional customer service and our team of experts are only a phone call away to address any questions or concerns you may have. With our top customer rating, you can have confidence in our expertise and commitment to your peace of mind.
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