Life Insurance and Children

author image - crispin

By Crispin O'Toole-Bateman

on Friday 6 September 2019

Father playing with his two children in living room

Does my child need life insurance?

When we consider life insurance for our family needs, it is typical to ask the question of how much life insurance you need for a child. Even among experts, the answers differ, but here at Unite Life we have a general answer: none.

It may sound surprising for a life insurance company to be advocating not getting life insurance, and indeed there is no minimum life insurance age limit with children’s insurance being readily available, but as honest advisors we tend to steer away from it.

Why?

Life insurance is a product designed to provide financial support when someone intrinsic to the financial stability of the family is sadly no longer there.

When one of the breadwinners dies, the financial effect on the remaining family can be devastating and life insurance is here to help pick up those pieces – the same is true if a stay-at-home parent passes away.

A child, however, has no such effect, and rarely contributes to the family income, meaning that life insurance for children has less of an obvious purpose.

Can you get life insurance for a child?

Yes. Child life insurance in the UK is available in a variety of ways, with both term policies and whole of life cover an option for concerned parents. While at Unite Life we tend to advise other options, we understand also that for some families child life insurance plans are beneficial and serve an important purpose.

Typically though, the alternatives are more suitable.

Getting critical illness cover for children

While we don’t place too much importance on child’s life insurance, at Unite Life we are strong advocates of critical illness insurance, which provides benefits for children and parents alike.

We don’t like to think about our children getting sick, but it does happen, and when it does, it can be incredibly expensive. Even a relatively short-term illness that lasts a few months can result in a parent (or both parents) being out of work during that time.

Significant illnesses and injuries that are insured with critical illness cover (CIC) can be debilitating, with parents sometimes needing to leave their job in order to properly care for their children.

It is pleasing to know that children’s critical illness cover is typically part of your general family life insurance, which means that if you have life cover with critical illness options yourself, then your children will often be covered too.

What is child critical illness insurance and what does it cover?

Different insurance companies will provide different levels of children’s CIC, however, for many the rules are similar:

  • A benefit payout of £25,000 or 50% of your personal CIC cover – whichever is lower.
  • Cover extended to all your children without prejudice – this means biological children, adopted children and step-children are all covered. With some insurers, the net is even wider and any children who live in your household and whom you have financial responsibility for are automatically insured.
  • Children covered from the age of 30 days old until 18 years, or 21 if in full-time education.

There are, of course, a number of exclusions and claim conditions. Most providers demand that the illness must be one that was not present at birth or a pre-existing condition when the CIC was taken out. They will also not pay out for death (remember, it is critical illness cover, not life insurance) nor if the child dies within 14 days of the first diagnosis.

Remember that each policy is different, as are their exclusions, so always be sure to ask your provider about any conditions that come with your insurance before you purchase it.

Most insurers will allow you to claim for up to two children during the lifetime of your insurance without it affecting the cover amount of your own CIC.

Remember also that illnesses covered by the child’s CIC will be subject to the same criteria as your adult policy, which (again) may be different per insurer.

For more information about critical illness cover, including what to do if your child becomes critically ill or to check if your child is covered in your insurance policy, give us a call to speak to an advisor or browse our CIC resources.

The saving alternative to child life insurance

The main other alternative to children’s life cover is a savings account.

When comparing adult life insurance with basic savings, the savings account almost always comes off as an inferior investment, but with children – who are expected to live long and healthy lives – a savings investment often works out more in favour.

Should your child sadly pass, you will have some money put aside to help pay for a funeral and support you through the time.

If you take out CIC for your child and nothing unexpected happens – he or she does not fall ill or pass away – they will have a substantial sum to help them during those first steps of adult life, at which point a standard adult life insurance policy can take over.

What is the youngest age you can get life insurance as an adult?

As with many financial obligations, life insurance is available for all adults 18 and over. Getting life insurance as soon as you turn 18 is a solid financial investment, as your policy premiums will be set at a time when you are healthy and hearty!

Many excellent life insurance policies can be obtained for as little as £6 per month at 18, giving you many thousands of pounds of cover for an amount that’s less than two coffees!

When child’s life insurance is the right thing

Despite our general advice to the contrary, there are times when dedicated children’s life insurance is a good idea. These include:

  • When the loss of a child would cause financial hardship, such as with a working single parent family where the period of grief could be devastating.
  • When finances are strapped enough to mean the cost of a funeral would be difficult to cover – here a basic policy to cover funeral costs would be ideal.
  • If you are unable to get your own life insurance with critical illness cover – if you have a pre-existing medical condition that prevents you covering your children with your own life insurance policy, then standalone CIC or life insurance with critical illness cover for your children will help protect them.

At Unite Life, we are happy to talk to you about your children’s financial stability and will be able to find a quote that’s perfect for you.

How to get CIC to cover your family

If you don’t already have life insurance and critical illness cover, or if you have life insurance without the addition of CIC, then give us a call today. At Unite Life, we have expert advisors who can look at your personal circumstances and work out a policy that’s perfectly designed to suit you.

Complete our short contact form for more information or simply pick up the phone and give us a call today!

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