08/25/2026
š” Letās talk about a financial planning tool most people overlook: Life insurance for children.
When I tell people my son Leo has a $200,000 life insurance policy, I usually get some funny looks. Most people ask, "Why would a child need that much coverage?"According to CNBC Select, standard children's life insurance policies typically cap out between $5,000 and $50,000. Leo's policy is significantly higher than average, and there is a very strategic, long-term financial reason for it.
Meanwhile, adult Americans are severely underinsured. The LIMRA Insurance Barometer Study reports that roughly 40% of American adults have no life insurance at all, leaving a combined household coverage gap of trillions of dollars.
We don't own this policy because we think something terrible will happen to Leo. We own it because we understand how life works, and we want to protect his future adulthood. Here is why:
š 1. Locking in Maximum Insurability
We bought this policy at the healthiest point of Leo's life. Premiums are at their absolute cheapest because he is young. Once a policy is issued, those low rates and coverages are locked in for life.
𩺠2. Real-World Medical Precedents
This hits close to home for me. My sister was diagnosed with Type 1 Diabetes at just 5 years old. Because of that early medical curveball, she is completely uninsurable through most major insurance companies today. The very few companies that will consider her charge exceptionally high premiums. Health is a privilege that can change in a single doctor's visit.
š 3. The Guaranteed Purchase Option
Leoās policy includes a special rider that gives him the option to buy significantly more coverage in the futureācompletely no questions asked regarding his health status. If he develops a chronic condition later in life, the insurance company cannot deny him more coverage.
š° 4. Living Benefits & Cash Value
This isn't just a "death benefit." Certain permanent policies double as a wealth-building foundation. The policy grows cash value over time that Leo can eventually leverage while he is still aliveāwhether he needs a tax-free loan for college education, a down payment on a first home, or funding for a wedding.
Buying life insurance for a child isn't about expecting the worst; itās about guaranteeing their financial best before the world has a chance to tell them "no."