Best Life Insurance for Kids. A Child IUL. How to Leave a Legacy with only $99.

When people think about kids’ life insurance, they typically think about the old child whole life policies your grandparents use to buy or maybe even the Gerber Grow Up plan. Both of which are a waste of money.

The type of life insurance policy for children we are talking about is much, much different from those old types of plans. It is a permanent plan, but not a whole life insurance plan.

It’s called a Kids IUL some people call it a million dollar baby IUL. And I set up one for both of my kids when they were babies.

This plan serves three main purposes. It provides guaranteed insurability for life, the ability to access cash in the child’s ’20s or ’30s and to give them a stream of tax-free income when they retire.

The best part is I only need to fund this policy for 20 years and just $99 a month.

Although nobody wants to think about the loss of a child, owning life insurance for babies or a newborn can provide a number of financial benefits – both in the short- and long term.

What is the Best Life Insurance Policy for Kids?

Indexed Universal Life (IUL) insurance is often considered the best life insurance plan for a child whether newborn or a teenager for several reasons. Firstly, it offers protection and coverage, guaranteeing a death benefit to the child’s beneficiaries in the event of an unfortunate occurrence. This feature ensures financial security for the child’s family, as it covers expenses such as funeral costs, outstanding debts and provides a source of income replacement for the family.

IUL policies also have the advantage of cash value accumulation. A portion of the premium paid for an IUL policy is allocated toward an investment account that grows over time. This cash value has the potential to accumulate tax-deferred, allowing it to grow faster compared to traditional savings accounts. This aspect can be advantageous for a child as it will enable the policy to build cash value that can be utilized for various purposes such as education expenses, a down payment on a home, or supplementing retirement savings.

Another benefit of an IUL policy is its flexibility. It allows the policyholder, in this case, the child, to adjust the death benefit and premium amounts to meet their changing needs and financial circumstances. This flexibility benefits a child with changing financial goals as they grow older, such as starting a business or buying a home. The ability to modify the policy helps ensure that the life insurance coverage aligns with the child’s evolving requirements.

Additionally, IUL policies often offer the potential to earn returns based on the performance of a specific stock market index, such as the S&P 500. This feature, known as index crediting, allows the policy’s cash value to participate in market gains while also providing downside protection against market losses. This can appeal to a child’s policy as it offers higher returns than traditional savings accounts or other low-risk investment options.

How the Old Childrens Whole Life InsuranceWorks

Your grandparents may have set up a juvenile life insurance policy for you when you were young or even a newborn. It’s likely that, while well-intentioned, this plan offered only a small death benefit, along with cash value that grew – but at a turtle’s pace. Whole life is not the best life insurance for kids.

Unfortunately, the only one that these plans usually benefitted was the life insurance company. That’s because, with no real benefit to speak of, it was probably determined at some point that the premium wasn’t worth paying.

But a Child IUL is much different from whole life coverage – and there are several reasons for this. One is because these plans offer a significant death benefit for the child, starting on day one. This can provide funds for parents and other loved ones if the unthinkable occurs. It can also offer guaranteed insurability throughout the child’s life – even if he or she contracts an adverse health condition in the future.

Another key benefit of a Child’s IUL is the cash value – which can grow to an excess of a million dollars by the time the child reaches retirement age. Plus, there are strategies for accessing this cash tax-free, so it can be used for paying off high-interest debt like student loans, or a nice supplement to future retirement income.

How a Child IUL Works

Starting a child IUL for a kid can provide both financial security and protection throughout all phases of his or her life.

A Child IUL is an indexed universal life policy, the cash value can grow, based on the performance of an underlying market index such as the S&P 500. These plans can offer the chance to attain double-digit upside performance, depending on the stated “cap,” or maximum. We can set you up with the best life insurance companies as we know all the carrier’s products and benefits.

In addition to the opportunity for cash value substantial growth, with a child IUL, there is no need to worry about the loss in value – even if the stock market tumbles. That’s because IUL’s provide guaranteed minimum floors of 0%, which keep the principal safe.

As the cash value in the policy grows, it is able to compound on a tax-deferred basis, meaning that no tax is due on the gain. This can allow the money in the policy to grow and compound exponentially over time.

Unlike IRAs and employer-sponsored retirement plans like 401(k)s, there is no IRS “early withdrawal” penalty for accessing funds from a IUL prior to age 59 ½. This means that money is available at any age, and it doesn’t have to be reported on a tax return.

There is also no funding limit with a kids IUL as long as you do not MEC the policy. So, if the child decides to add more money to the plan over time, these funds will also have the benefit of growing tax-deferred. With that in mind, this buying life insurance coverage can offer a great alternative for tax-advantaged growth, even if an individual’s IRA and/or 401(k) have been “maxed out” for the year.

Decide On Term Or Permanent Life Insurance For a Baby

When it comes to life insurance, there are two main types: term life insurance and whole life insurance. Term provides coverage for a set period of time—usually 10 to 30 years—and pays out only if you die during that timeframe. Term life insurance is rarely a good idea for a child.

Permanent life insurance coverage provides protection throughout your entire life, but requires regular monthly premium payments which will build up cash value. When it comes to providing for children’s future education costs, permanent insurance is usually the best choice, as you can build up a lot of cash value and solve many of life’s future challenges when buying this plan.

3 Reasons I Set This Plan up for My Children

You can never be too careful when it comes to protecting your family, and buying life insurance for your child ensures that your kids are always taken care of no matter what. But with so many life insurance companies out there, how do you know which one has the best child life insurance plans? That’s where we can help. We do know.

Below I will give you reasons I set up my kid’s life insurance plan and why it will ensure that my children are financially safe after I’m gone..

Guaranteed Insurability for Life

While the main goal of a Child IUL is to provide living benefits like retirement income and funds for other needs, one of the primary benefits is the death benefit protection the child policy includes.

With a IUL for children, you can immediately lock in a very low cost of insurance which allows the policy more growth and less cost. Plus, the life insurance for kids includes an increasing death benefit which will leave them with plenty of coverage in the future. With this option, the child can protect his or her loved ones down the road as they become adults – even if they have contracted an adverse health condition – they will still have their insurability

Start a Business, Pay Off College, or Purchase a House

If you children’s life insurance, as they become older, the cash value in the policy will continue to accumulate better than any savings account or 529 plan. And, by the time the child reaches college age or older, they will have accumulated a nice lump sum of cash within the policy.

This cash can be taken as a tax-free loan or as a withdrawal from the policy. This money will be available for a variety of needs and wants, such as paying for college or student loans, starting a business, and / or purchasing a home.

Stream of Tax Free Income in Retirement

We talked about the ability of this policy to grow cash value – but how can that cash value be used in the future?

There are actually a number of ways that cash from the policy can be used in the future – which is why these plans are considered too flexible. First, if the cash is held in the account until the child reaches retirement age, he or she can take tax-free policy loans to supplement retirement income. This can help to provide income certainty – regardless of what future income tax rates are.

At the same time, because a IUL provides a “floor” to your returns, there is never a year where the cash value takes a loss. This is true, even if the stock market tumbles. Plus, because there are no losses, the cash in the policy continues to build on previous gains. You can’t get this type of safety – or guarantee – from market-related investments.

There are any number of ways that the cash from the policy can be used, such as:

  • Starting a business (without having to take out a loan)
  • Paying for health care and/or future long-term care needs
  • The purchase of a home and / or vehicle
  • Lending to others in return for a stated interest rate (which can essentially boost income even more

A look at the numbers

Now that you know the reasons that I set this plan up for my kids, let’s dive into the numbers so you can have a better look at what happens to the cash value and how it can be used in the future.

The policy I designed for my kids calls for monthly premiums of $99, which are paid over a 20-year period. These premiums can be paid by either a parent or a grandparent. After 20 years, there are no more premiums that have to be paid into the policy.

I’ve illustrated this plan in two ways. Option A with a one-time cash distribution to the child at age 30, and Option B where the child does not take money from the account.

In option A at the child’s age of 30, a withdrawal of the premiums – a total of $20,000 – can be taken out of the policy and given to the child to use – or even to reimburse the payor.  Here is an example of tax-free income the child can take even with taking a distribution at age 30, by the time she turns 65 she could begin accessing more than $57,000 per year over the next 15 years, which essentially allows her more than $900,000 in cash distributions tax free.

In option B if she leaves the policy as is until retirement age, though, the numbers get even better! In this case, she could access more than $1.3 million – accessing more than $81,000 per year over the next 15 years – even though the total premiums contributed were less than $25,000!

Option A

  • $20,000 Cash Withdrawal at age 30
  • Initial Death Benefit $177,805
  • Tax Fee Income – Ages 65-80 – $57,610/year
  • Total Contributions $23,760
  • Total Distributions $941,760

Option B

  • No Cash Withdrawal at age 30
  • Initial Death Benefit $177,805
  • Tax Fee Income – Ages 65-80 – $81,801/year
  • Total Contributions $23,760
  • Total Distributions $1,308,816

How to Set Up a IUL for Your Child

Setting up a IUL Plan for kids is easy – and can set your child up with a lifetime of security. While there is a long list of benefits to setting up a IUL for your child, the actual mechanics of putting the plan in place can be somewhat challenging.

So, in order to make sure that the strategy works the way you intend it to, it is best to work with an insurance professional who not only has a focus on Life Insurance Retirement Plans, but who can also go out into the market place and find the best product for your specific needs.

And remember don’t waste time or money with the child whole life insurance policies that are available today or the Gerber Grow Up Plans. If either of these were great products, that is what I would have bought for my kids. They are not, let us design you a real product with real benefits.

Also, If you have a child who needs coverage, it’s best to buy a separate plan as opposed to adding them to your existing policy.

Another important point to remember is that although buying life insurance can help provide for your child if something were to happen to you, it’s also an investment that provides protection for your family even when you’re alive. Many experts recommend saving enough money in a separate account (usually known as a helper account) to pay off debts and provide some financial support for your loved ones after you pass away.

At Insurance Geek, we work with more than 30 of the top-rated life insurance companies in the industry. So, we can custom fit the right tools for the job. Contact us today and see how easy it is to get your child or grandchild’s life insurance plan in place.


In conclusion, when it comes to securing a solid financial foundation for your child’s future, an Indexed Universal Life (IUL) insurance policy can be an ideal choice. With the potential for market-based growth, downside protection, tax-advantaged savings, and long-term accumulation, an IUL policy offers a powerful combination of benefits. At Insurance Geek, we bring years of experience and expertise in running properly structured IUL policies, ensuring that your child’s policy is optimized for maximum cash value growth and financial security.

Contact us today for a fast quote and let our knowledgeable team guide you toward a well-structured IUL policy that sets your child on the path to a prosperous future. Take the first step in securing your child’s financial well-being with Insurance Geek.