Legal Considerations When Children Buy Life Insurance

Many states allow a minor fifteen years old or over to purchase a life insurance contract on his or her own life but upon reaching the age of majority, he or she can void the contract. The insurer is bound by a life insurance contract made with a minor unless and until the minor disaffirms it. A child generally may disaffirm (void the contract) at any time while the child is a minor under state law or within a reasonable amount of time after reaching leal majority. Once the policy is void, the former minor is entitled to a return of whatever premium he or she has paid but must return any dividends or other money received from the policy.

Note that many of these statutes allow the minor to make benefits payable only to close family members such as parents or siblings or the minor’s estate. Some, but not all states, limit the insured to the minor himself. Others allow the minor to insure the life of a child or spouse.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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