Do my children need life insurance?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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, updated on November 25th, 2021       

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Any parent would like to protect the future of their child to ensure that they are financially taken care of should anything happen to them. Taking life insurance doesn’t always have to focus on illness and death, but it can also ensure that your child is prepared financially for life’s major changes. These are a few handy things you need to know when taking out a policy for your child.

What is child life insurance?

Child life insurance is a similar cover to that of an adult. Life insurance is a policy that has a lump sum benefit that gets paid when someone falls terminally ill, has a critical illness or has passed on. However, it can also be used to pay for educational expenses, medical bills, and managing debt. You can add life insurance for a child as an additional benefit to your existing life insurance policy. Getting a standalone policy in Australia could be difficult.

How old must my child be to get life insurance?

It is possible to take out a life insurance policy for your child once they have turned one. If you feel that policy needs to be updated you can do so throughout the term of the policies existence, or you could add the changes when your child turns 18 years old. However, you should bear in mind that adding a savings component to the policy to help you save towards the child’s education won’t be possible since this feature has been phased out. What if my child has a pre-existing medical condition? Thankfully, it is possible to take out a life insurance policy even if your child has a pre-existing medical condition. There are insurers that offer policies tailored for people who have existing medical conditions. It is crucial that during the application process you disclose the relevant medical history that is needed. Your premiums could be slightly higher, but this is to ensure that your child gets adequate cover. Always keep in mind to find a lender that covers your child’s pre-existing condition than to wait until it is too late.

What will a life insurance policy for my child cover?

  • Medical expenses
  • Pay for a special care nurse
  • Take care of everyday living expenses
  • Cover funeral expenses

A life insurance policy will essentially provide your child and your family the financial safety net they need to help them during such difficult times.

How do I know that I am getting the right policy for my child?

Not all policies are created equally, and some might even come with exclusions that you need to be aware of. When you are in the process of finding a policy that will adequately cover your child it is vital that you read the Product Disclosure Statement to check whether the policy is appropriate for your needs and circumstances. Comparing policies can also help you get the best value for your money.

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