Can Grandparents Take Out Life Insurance on a Grandchild?

The arrival of a new grandchild is a happy occasion for the grandparents, who might want to purchase a special gift to commemorate the occasion. Given the life-changing nature of this event, many people want to do something substantial for their newest descendant, and they wonder if they can purchase a life insurance policy. Grandparents can purchase life insurance policies covering their grandchildren, but first they should examine their motivations and reasons for making this purchase.

Motivations for Insuring Children

People cite different motivations for purchasing life insurance on children or grandchildren. For many, it is a way to show that they love the child. Since grandparents love their grandchild, they want to make sure that he has insurance. This is also used as a selling technique by insurance agents. Some people purchase insurance as an investment, or as a way to save for college expenses. Another motivation for life insurance is as a way to pay for unexpected funeral expenses, or to provide the parents counseling or other support in case of the death of a child.

Income Protection

A primary reason to purchase life insurance is to replace that person's income if he were to die. If your grandchild is earning money, such as a child actor or entertainer, and the family depends on this income, you can purchase a policy in case the child dies and the income is lost.

Future Insurability

Insurance on young children is often used as a way to protect the future insurability of the child, in case he develops health problems when he gets older and cannot purchase life insurance on his own. Many child policies allow an extension of the policy without a health exam on a future date. If your family has a history of health problems, purchasing this type of policy might make sense. However, most people in their 20s and 30s are insurable through conventional life insurance policies, so the added protection might be of little value.


If you are purchasing a life insurance policy for your grandchild as a way to save for his future, consider other alternatives that might work better. A basic savings account is a flexible and safe way to provide money for future uses, as are U.S. savings bonds. You can also invest in a 529 college savings plan and provide tax-advantaged savings for future college expenses.

Purchasing Life Insurance for Children

You can contact a life insurance agent to purchase a life insurance policy for your grandchild. An ethical agent will help you tailor a policy for exactly what you need and the goals that you wish to accomplish with this policy. Many whole-life children's insurance policies are also sold through television advertisements and direct mailers.