Buying Life Insurance as a Gift for Children or Grandchildren

buying life insurance as a gift for children or grandchildren

Parents and grandparents can protect their loved ones when buying life insurance as a gift for children or grandchildren. It is a misconception that life insurance is only for people who are married, have families, or those in their twilight years to pay for burial expenses. In reality, one of the best times to buy life insurance is at a young age to secure the lowest possible rates. Assurance Life can assist you in buying life insurance as a gift for children or grandchildren.


Advantages for children under 18


Whole life insurance policies for children have many advantages. Insurance rates are based on age and health so it stands to reason that a child in good health will secure the best monthly premium available. Usually parents and grandparents buying life insurance as a gift for children or grandchildren are not planning ahead in case of a tragedy. Rather they have realized the benefit of establishing a whole life insurance plan that will stay with their loved one over the years. By starting young, the child or grandchild will have an appreciation for the value of having a life insurance plan in place. One benefit that is often overlooked is the ability to borrow against the face value of the life insurance plan.

As the child grows to adulthood, the parent or grandparent can use the premiums paid toward the policy as a savings account that can be used as collateral against a small loan in a time of need. The policy is also transferable to the child or grandchild when they become old enough to take responsibility for their own life insurance. At this time, they will greatly appreciate the low monthly premium compared to what an adult pays when starting a whole life policy.

A final advantage is that some companies specializing in children’s life insurance policies automatically increase the face value of the policy upon a certain age without increasing the monthly premium. One example is Gerber Life whose child policy doubles when the child reaches the age of 30, free of charge.

Recap of advantages


Low monthly premiums
Establish value of having life insurance
Policy is transferable
Cash value of policy means loans can be taken out against the policy
Face value increases over time with some companies

How to purchase child whole life insurance?

The first step to buying life insurance as a gift for children or grandchildren is to find a broker who can help you compare options for your family. A broker works with companies who specialize in children’s plans so that you get the most coverage for the lowest premium. They are also aware of which companies offer the untold benefits such as the value of the policy increasing over time. Assurance Life is a broker licensed nationwide who can assist with your family’s whole life insurance needs.

Free quotes with no obligation are a good way to gather information and make steps towards a decision for your child or grandchild’s whole life policy. The application process is very simple and only a small list of health questions are asked for this type of policy. Parents and grandparents are usually glad to find out that no medical exam is needed. Unless a child has a serious health condition, they are usually approved for preferred coverage which means the policy is active as soon as the first payment is received. Once the whole life policy is issued, it will remain in effect for the child or grandchild’s entire life as long as the monthly payment is made.

FAQs about buying life insurance as a gift for children or grandchildren


Typically, life insurance is taken out by the insured or offered through a employer benefit. There are important FAQs that are asked about buying life insurance for a child or grandchild. One common question is who owns the life insurance policy when one person buys it and a different person is the insured. When the insured is not the person financially responsible for the payment, the policy is considered owned by the person who has arranged for the policy and is making the monthly payments.

In this case the parent or grandparent owns the policy, not the child or grandchild. The parent or grandparent would want to make sure it is specified who will take over financial responsibility upon their death so that the policy for the child or grandchild can stay active. Another FAQ is wondering when will it be a good time to transfer the policy to the child or grandchild. This varies case by case. For some families, the age of 18 means adulthood and they want their child or grandchild to take on adult responsibilities.

More often, around the time a child marries and is established financially is an appropriate time to pass on the responsibility of handling their whole life policy. The biggest consideration is not losing the benefit of the years the policy has been established at a very low monthly premium if the child or grandchild will not act responsibly and make the payment. So whatever age the parent or grandparent chooses, it should be at an age that the policy will be appreciated and continued. The last common FAQ about this type of whole life policy is who can borrow against the face value and how that works. The critical thing to remember about borrowing against the policy is that only the owner of the policy may do this.

The child or grandchild cannot do this without the owner’s approval so that protects the policy by requiring that the financially responsible party must be the one to ask for the loan. Some situations where people consider borrowing against their whole life policy are to pay for college tuition, purchase a first car, or sometimes for a down payment on a home. The insurance company provides requirements for repayment but the advantage is that it is usually interest free.


Buying life insurance as a gift for children or grandchildren is a timeless gift which will continue to bless your child or grandchild for years to come. Your family will remember and appreciate this gift as it the benefit grows, monies are available, and your child or grandchild takes over the responsibility down the road knowing you planned ahead with this important protection. Assurance Life would be honored to help you with this process- Call us at 800-517-0810 to get started.