Do You Need Life Insurance for Teenagers?

Should you get life insurance for teenagers?

You want the best for your teen, now and in the future. If you’re thinking about life insurance for teenagers, there’s some specific benefits and advantages to getting a policy.

Here’s what you need to know about coverage options and costs to get life insurance for your teenager:

4 Reasons to Get Life Insurance for Teenagers

Even though most teenagers don’t carry a parent’s level of financial responsibility (e.g.: mortgage, car payment, credit card debt, dependents), there are four reasons to consider life insurance for teens.

1. Guaranteed insurability

One very common reason to purchase life insurance for teenagers is called “guaranteed insurability.”

Guaranteed insurability is an option on permanent life insurance policies. It allows a covered individual to purchase additional coverage without having to prove health status again. The amount of coverage that can be added, and at which intervals in time, are specified in the specific life insurance policy.

So what happens when you purchase life insurance for your teen now, while they are young and healthy?

Low premium. Their premium will start low and remain low throughout their coverage.
Additional coverage. Additionally, they can add more coverage to their plan as they get older without having to update their health status.
Health conditions. If they develop a health condition, their ability to get life insurance won’t become a concern. They will have the option of maintaining their current policy as they age, adding to it as their life progresses.

2. Medical and funeral expenses

Medical and funeral expenses are conventional reasons to purchase life insurance for teenagers. An unexpected loss, independent of age, can be a financial burden.

Burial & cremation costs. The average cost for a burial funeral in the United States is $7,848, according to the National Funeral Directors Association.¹ The average cost for cremation is $6,971.
Additional funeral expenses. But this doesn’t include a burial plot for an urn or casket. The average burial plot costs around $1,000 to $4,500, depending on the location, size of the plot and several other factors.²

3. Student loans

When it’s time to send your teen off to college, trade school, or other higher-education opportunity, student loans may be essential to paying for education.

It’s important to remember that not all student loans are treated equally if your student passes away before paying them back.

Federal student loans are “discharged” if the borrower passes away. After proof of death, the student loan debt is written off.³
Private student loans do not have to discharge loans if the borrower passes away. If whoever has taken out a loan dies, the debt will be collected from their estate. If there isn’t an estate, the debt will be collected from the student’s co-signers or a spouse.

If you purchase life insurance for your teen and your teen has a student loan, it’s a good idea to add the sum of the loan to the policy.

4. Extended bereavement leave & grief counseling

The loss of a young family member can be devastating for everyone. Parents may want to take extra time off work before they feel comfortable returning.

Bereavement leave. If that time isn’t paid leave, you or your spouse may be put in a difficult position—go back to work before you are ready, or experience a drop in your regular income. Note: The typical bereavement leave policy for private-sector employers is just three to five days.⁴
Grief counseling. Additionally, the entire family could benefit from some level of grief counseling. This typically involves working with a professional counselor or therapist for a few months to a year or longer.

However, for a family working through loss, having the tools and financial resources needed to move forward can be priceless. A well-planned teen life insurance policy can help you afford both time off work and grief counseling.

3 Types of Life Insurance for Teenagers

All types of life insurance policies will cover a teen. That doesn’t mean every life insurance company will agree to sell life insurance for your teenager. However, you have a host of options to choose from, including a:

Child rider
Term policy
Permanent policy

1. Child rider

A child rider is an addition you can make to your existing life insurance policy. It provides a death benefit if one of the children covered on the rider dies.

However, a child rider does not continue indefinitely. Once your teenager reaches a specified age, you and your teen will have a decision to make.

You can:

Convert the child rider into a permanent life insurance policy, or…
Let the coverage end.

If you are unsure about life insurance for teenagers, a child rider is a good place to start.

2. Term policy

A term policy is an individual life insurance policy, not an addition to an existing plan.

Term limits. Term life insurance policies provide coverage for a specific amount of time (usually 5 to 30 years).
Renewal. The plans can be renewed after that time has ended, but health may be assessed, and premiums may then increase.
Cost. Term policies tend to be less expensive than permanent life insurance, and the cost-to-coverage ratio is good for those who are not concerned about guaranteed insurability.

3. Permanent policy

If your main purpose in buying life insurance for a teenager is guaranteed insurability, consider a permanent life insurance policy.

Permanent coverage. Permanent life insurance is designed to stay with an individual permanently. There are not specified allotments of time when the plan will need to be renewed or re-evaluated. As long as premiums are paid, the policy stays in effect.
Maturity. Permanent policies technically have a “maturity age” (usually around 95 or 100 years old), meaning they will end when you reach that age.
Types of permanent policies. Whole and universal are two popular types of permanent life insurance.

Life Insurance for Teenagers: How Much Should You Get?

The amount of life insurance you choose depends on what you want out of it and your budget. Here are a few things to consider:

A higher death benefit (the amount a beneficiary receives after the insured person has passed) will be more expensive. So after you consider your needs with your family, you will also have to decide how much you can afford to pay in life insurance premiums.
Minimum recommendation. At minimum, any life insurance for a teenager should cover the cost of a funeral. Because the average funeral costs around $8,000 to $10,000, aim for a plan that will cover at least that amount.1,2 Anything above that amount can be useful for your family as long as you can comfortably afford the premiums.

How Much Does Life Insurance for Teenagers Cost?

The cost of a life insurance policy will depend on several factors, including the:

Type of plan
Amount of death benefit
Insurance company you choose

For example:⁵

A child rider can cost $5 to $7 per month for every $1,000 in death benefits.
A 20-year term policy can cost $12 each month for $250,000 in death benefits.
A permanent policy can cost $176 each month for $250,000 in death benefits.

Questions about life insurance for teenagers?

If you have questions about life insurance for teenagers, we can help. Call us at (800) 827-9990 to talk with a licensed HealthMarkets agent. You can also find an agent in your area to schedule an appointment and get advice about life insurance for your teenager.