Can I Buy My Grandchildren Life Insurance?

Many insurance companies allow you to take a life insurance policy out on your child or grandchild while they’re still a minor. While life insurance for your grandchild may be the furthest thing from your mind, there are unique benefits to buying a policy for your grandchild while they are still young.

Keep reading to learn about how life insurance for grandchildren works.

On This Page

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  What Are the Benefits of Buying Life Insurance for My Grandchild?

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  When Should I Buy Life Insurance for My Grandchildren?

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  Can I Gift My Grandchild Life Insurance?

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  Can I Transfer My Existing Life Insurance Policy to My Grandchild?

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  How Does Buying Life Insurance for Minors Work?

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  What Are Alternatives to Life Insurance for Grandchildren?

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  FAQs

What Are the Benefits of Buying Life Insurance for My Grandchild?

There are several benefits to buying a life insurance policy for your grandchild, including securing a lower rate, guaranteeing future insurability and more.

Lock In a Lower Premium

Children have lower mortality rates compared to those who are older and may have certain conditions and enjoy lower rates as a result.^[1] For example, below are Mutual of Omaha’s child whole life insurance monthly premiums based on age and payout.^[2] It may cost only around $18 for a $50,000 death benefit for a 17-year-old but it can climb as high as $152 on average for somebody who is 50 years old.^[3]

In addition, as whole life insurance policies retain the same premium until the policy ends, locking in a cheaper policy when your grandchild is younger can provide less strain on their budgets when they are older paying the premium themself.

Future Insurability

If you buy your grandchild a term life insurance and they later want to convert it to a whole life insurance policy, they are guaranteed to get approved and may not have to undergo an examination. Even if they develop a condition that would otherwise result in their life insurance application getting denied, purchasing a plan while they are young ensures they can get coverage when they are older.

Future Savings

Whole life insurance policies place a portion of your paid premium into the policy's cash value, building up over time. This value can be “cashed out” when they’re older, either partially or, if they surrender the policy and forfeit the death benefit, in full. Your grandchild can then use this money to pay for college, medical bills, a down payment on their home and more. By starting an insurance policy earlier in life for your grandchild, you can begin putting money towards their future.

Peace of Mind

The last thing a grandparent wants to consider is the premature death of their grandchild, but it’s a reality that can be costly. The average funeral with a burial can cost between $6,000 and $12,000.^[4] Depending on the financial situation of your grandchild’s family, having the coverage of a life insurance policy could help cover funeral expenses that may otherwise be a burden.

When Should I Buy Life Insurance for My Grandchildren?

Purchasing life insurance for your grandchildren at a young age — sometimes as early as just two weeks old — can be a smart financial decision, as premiums are significantly lower the earlier you purchase.^[5] For example, a policy bought when your grandchild is 20 years old can cost less than half of what it would if purchased at age 40.^[6]

Additionally, if you choose a life insurance policy with an investment component, buying early allows more time for the investment to grow and compound, potentially providing a substantial financial benefit in the future. By securing life insurance now, you not only lock in affordable premiums but also give your grandchildren a financial safety net and a head start on building wealth.

Can I Gift My Grandchild Life Insurance?

You can purchase a life insurance policy on behalf of your grandchild by naming them as the insured in the policy. Some insurance companies may require written or verbal permission from the child’s parent or caregiver to take a policy out on them, and if the child is over the age of 15, an insurer may also require consent from them.^[7]

As the policy owner, you will be held responsible for paying the premiums for the policy and retaining ownership of the policy, with the ability to change beneficiaries and alter coverage amounts according to the policy’s terms.

Keep in mind that if the policy is jointly owned, such as by you and your partner or your grandchild’s parents, owners have equal rights and can’t remove each other from the policy.

Can I Transfer My Existing Life Insurance Policy to My Grandchild?

Most life insurance policies allow you to transfer ownership to someone else, including your grandchild. Some insurers may allow you to transfer the policy once the grandchild reaches a certain age, while others, such as the Gerber Life Grow-Up plan, automatically transfer ownership of the policy to the child once they turn 21.^[8]

How Does Buying Life Insurance for Minors Work?

The primary difference between life insurance for minors and a standard policy is that minors can’t purchase life insurance independently. Therefore, the policy must be purchased on their behalf. Like a standard life insurance policy, a policy for minors will pay out a death benefit to the primary or contingent beneficiary in the event of the child’s death, provided they died from a covered event. Once the child is old enough, ownership of the policy can be transferred to them.

What Are Alternatives to Life Insurance for Grandchildren?

If you already hold a life insurance policy, you might have the option to purchase a child term rider and add it to your policy. These insurance add-ons can be purchased to cover one or more of your children between 15 days and 18 years old, providing a death benefit of a set amount according to the policy in the event of the child’s death. Coverage typically remains until the child turns 25 or you turn 65, whichever occurs first.^[9]