How To Buy Life Insurance For Your Grandchildren

Grandparents buying life insurance for grandchildren is a great way to give them a head start on their financial future.

You can lock in extremely low prices, guarantee their future insurability and help them build equity for college tuition or other major life events.

In this article, you’ll learn how these plans work, the cost, the requirements, the best companies, and the most common reasons to insure a grandchild.

Can You Buy Life Insurance For Grandchildren?

If you’re a grandparent or great-grandparent, you can indeed buy life insurance for your grandchildren.

The sheer nature of your relationship entitles you to do so.

Plus, you do not need to be their legal guardian, nor do you need consent from the child’s parents.

How Does Life Insurance For Grandchildren Work?

A grandchild’s life insurance plan is typically a whole life insurance policy.

Whole life is a form of permanent life insurance with ironclad guarantees.

The premiums will never increase, coverage won’t decrease, and it lasts their entire life.

Also, it includes a behind-the-scenes savings account called “cash value,” which allows for tax-deferred growth.

A portion of each payment is routed into this account. It also typically earns interest.

The money in the cash value account can be withdrawn by the policyholder and used for anything, such as college expenses.

Another option would be to purchase a policy on yourself (the grandparent) and add a grandchild term life insurance rider.

If you opt for the rider method, the child does not have their own policy.

Coverage via a grandchild rider is just an add-on benefit to the grandparent’s policy.

Also, a term rider typically only insures a minor until the age of 18-25.

Regardless of how they are insured, if the minor children pass away while the coverage is in force, the insurance carrier will pay out the death benefit in the form of a lump sum cash payment (tax-free).

How Much Does Grandchild Life Insurance Cost?

Whole life insurance for grandchildren will generally cost $20-$35 monthly for roughly $50,000 in coverage.

Your actual premium payment depends on the kids’ age and the amount of coverage you buy.

Below is a table showing the monthly cost of juvenile life insurance from Mutual of Omaha.

Best Life Insurance Companies For Grandchildren

After looking at the companies offering life insurance for kids and grandkids, we narrowed it down to three companies.

While there are insurance carriers other than these three, we believe the best life insurance for grandchildren is with one of these three companies.

1) Mutual of Omaha

Mutual of Omaha is an exceptionally financially sound company that can and will pay its claims.

Their whole life insurance for grandchildren is our number one pick for a few reasons.

First, they offer a lower rate (for most ages) than other companies. Their online application process is by far the quickest and most straightforward compared to other companies.

In addition, they have high coverage options and valuable add-ons at no extra cost.

For example, if the policy owner dies, they grant a 90-day grace period. That allows ample time for someone else to take over the policy, so it doesn’t lapse.

Also, they guarantee that children can buy more coverage multiple times later in life without answering any health or lifestyle questions.

If you want to explore United of Omaha’s children’s life insurance, use the quoting tool on this page. You’ll see instant rates, and you can fully apply online in less than 2 minutes.

2) Globe Life

The most unique aspect of Globe Life’s children’s insurance is that they accept grandchildren as old as 24. All other insurance carriers have a maximum issue age of 17 for children’s insurance products.

And like Mutual of Omaha, Globe Life offers some of the lowest prices.

Globe is a fiscally strong insurance carrier, so you don’t need to worry if they will be in business many years from now or be able to pay their claims.

With Globe Life, you can apply online, via mail, or by speaking with a licensed insurance agent.

3) Gerber Life

The Gerber Grow Up Plan is affordable and easy to acquire with its online application process or by speaking with an insurance agent.

Gerber Life is a financially strong company with a long history of paying its claims.

The Grow Up Plan is unique because the coverage doubles once the child turns 18. Even though insurance doubles, the premiums remain the same.

The main downside to their coverage is the cost. Mutual of Omaha and Globe Life offer much lower rates. In fact, Mutual of Omaha costs about half as much as Gerber Life.

How Much Life Insurance Can Grandparents Buy For Their Grandkids?

Most companies will allow you to buy between $5,000-$50,000 in life insurance on grandkids.

The coverage options are similar when buying a life insurance policy for grandparents.

If you want more than just $50,000, remember that you can always buy multiple policies from multiple companies. No law or rule says you can’t.

How To Know If Your Grandchildren Will Qualify

First, no life insurance company will require a medical exam, nor will they request their medical records.

Similar to burial insurance plans, their qualification is based on the answers to a few health questions.

If you have a grandchild born with a health condition(s), you can still apply to see if it’s approved. The worst the insurance company will say is no.

That said, here’s a list of common conditions children deal with that will 100% result in decline:

• Down syndrome
• Diabetes
• Sickle cell anemia (sickle trait is okay)
• Spina Bifida
• Heart conditions

Again, there are other medical conditions that would result in a decline other than what’s listed there. Those are just some of the most common ones.

Thankfully most children are in good health, which means they will easily qualify.

Should You Buy Life Coverage For Your Grandkids?

It’s truly a matter of personal preference whether or not you should purchase life insurance on a grandchild of yours.

Some financial professionals say yes, you should, and some say no, you shouldn’t.

In the end, you have to choose if you think it’s worth it or not.

That said, there are three main reasons you should consider life insurance coverage for your grandkids.

#1 Funeral expenses

Hopefully, this is never your reality, but coverage for final expenses is easily the biggest reason to buy life insurance for anyone, let alone your grandkids.

Albeit rare, child deaths do happen, and funerals aren’t cheap. The typical funeral costs nearly $10,000 in most states.

A life policy can give you and your loved ones peace of mind knowing their unexpected death won’t create significant financial hardship.

#2 Guaranteed option to buy coverage later in life

Many child life insurance policies guarantee that the children can purchase more coverage later in life.

The additional coverage is guaranteed and not subject to underwriting requirements.

That is great because if they develop some health issues later in life, they can still acquire more coverage and maintain their financial security.

#3 Savings for future use

Whole life is a type of policy that will build cash value.

Cash value is like an unseen savings account that continually grows. Every time you make a payment, a small portion goes into the cash value account.

It also typically earns interest (varies by the company).

You can access the cash value anytime later in life for whatever purpose you desire. You can use the money to pay for college expenses, a down payment on a house, medical bills, or anything else you want.

Before withdrawing large sums of money from your policy and gifting it to your grandchildren, you may want to consult with a CPA about any potential gift taxes that could be incurred.

As of 2022, you can gift up to $16,000 without incurring any gift taxes.

Frequently Asked Questions