How to Talk to Your Kids About Life Insurance
Life insurance might seem like a complex topic, but in simple terms, it's all about ensuring financial security for our families — especially for our kids.
Rather than something to shy away from, life insurance can be a practical tool for protecting our kids and setting them up to face life’s challenges confidently. Open conversations about your family’s finances can help prepare your children for the future and teach them valuable lessons about financial planning. So if you’re wondering how to talk to your kids about life insurance, read on!
Why talk to your kids about life insurance?
Talking to your kids about life insurance might not be on the top of your to-do list, but there are some real benefits to starting this conversation early, including:
Financial literacy
When we introduce kids to concepts like life insurance, we’re giving them an early lesson in financial literacy and planning. It can help them understand the importance of preparing for the future and build their confidence in making financial decisions as they grow up. Starting these discussions now can lay a solid foundation for smart money management later on.
Family security
Kids don’t always know what life insurance is or why it matters, so it’s a great opportunity to explain that it’s a way to protect the family in the event you really need it. By talking to them about it, they can understand that life insurance is a safety net that ensures the family’s needs are met, even when life throws unexpected challenges our way.
Reducing anxiety
Sometimes, kids might worry about what would happen if they lost a parent, but they don’t always voice those fears. Explaining that there are plans in place for their security can help reassure them. In that sense, life insurance becomes just another way to let them know you’re thinking about their future and that they don’t have to worry about the unknown.
Normalizing the topic
For many of us, life insurance was something we only learned about in adulthood, often with a bit of confusion. By bringing it up early, you’re showing your kids that life insurance is a normal and responsible part of life planning. It’s one more way to help them feel comfortable around important financial topics, making them feel empowered and prepared as they grow up.
How to explain life insurance in simple terms
When it comes to how to talk to your kids about life insurance, it doesn’t have to be complicated. With a few simple approaches, you can make it a topic they understand and feel comfortable with. Here’s how:
Use kid-friendly language
Start by describing life insurance as a “safety net” that helps keep the family financially stable. You might say something like, “It’s like having a backup plan to make sure our family has what it needs, no matter what happens.” Framing it this way can help kids see it as a positive tool that protects the family.
Break down key concepts
Words like “policy,” “beneficiary,” and “premium” can sound like a foreign language to kids! Try explaining them with simple analogies. For example, you could say, “The policy is like a promise the insurance company makes to help us when we need it. The beneficiary is the person who gets that help, and the premium is the small payment we make to keep that promise active.” This approach can make the terms easier to remember and less intimidating.
Explain why it’s needed
Kids understand more than we sometimes think, especially when it comes to helping the family. You can explain that life insurance is there to help pay for things the family needs if something happens to a parent. Let them know certain types of life insurance even help cover costs, like housing or school, while we’re still alive. Keeping things practical and clear can give them a sense of security without overwhelming them with all the finer details.
Tips for age-appropriate conversations
Tailoring the conversation to your child’s age can help your kids understand life insurance in a way that’s meaningful to them. Here are some ways to approach the topic for the following age groups:
Young children (5-10)
For this age group, keep it simple. Emphasize that life insurance is a way to keep the family safe and secure. You might say, “It’s something we set up to help take care of everyone in the family.” If you’re purchasing life insurance for your child, you could explain that it’s a way of saving money for when they’re older — like putting away little bits of money now to help them pay for things when they’re all grown up.
Pre-teens (11-13)
At this point, you can start introducing basic financial concepts and the idea of planning ahead. Explain that life insurance is a part of making sure they are protected in the unlikely event of a death in the immediate family. You might say something like, “Life insurance helps us have a backup plan, just in case, so that the family can continue living the life we are used to.” This can help them see that financial planning isn’t just about saving money but about creating security for everyone.
Teenagers (14-18)
With teenagers, you can go into more detail about how life insurance works. For example: the difference between term versus whole life insurance, the potential for a whole life policy to grow over the years, and how life insurance can play a role in long-term financial planning. They’re at an age where they can understand the value of things like saving and investing, so you could discuss how life insurance can be part of a well-rounded plan for future stability.
Key points to emphasize during the conversation
When talking to your kids about life insurance, it can help to focus on the positive and practical aspects. Here are some key points to highlight:
Life insurance as a positive
Start by explaining that purchasing life insurance is a caring and responsible choice. You might say, “Getting life insurance is one of the ways we look out for each other. It’s a way to show how much we care and want to protect our family.”
Financial security
Emphasize that life insurance is a tool to help keep the family comfortable and provide support as they grow up, should they ever need it. You could say, “It’s something that helps make sure we’re all taken care of, no matter what.”
Planning for the unexpected
Kids can sometimes get worried when they hear about “what ifs,” so it’s important to frame life insurance as part of normal planning for the future – without creating fear. You might explain, “Just like how we plan for vacations or save up for special things, life insurance is just another way to make sure everything is taken care of, just in case.”
Responsible adulthood
Talk about how buying life insurance ties into being a responsible parent and adult. You could say, “One day, when you’re an adult, you’ll probably make choices like this, too, to take care of your children and the people you love.”
How to address common questions and concerns
Kids are naturally curious, so when life insurance comes up, they may have some questions. Here’s how to handle a few of the most common ones:
“Will something bad happen?”
If this question comes up, reassure them by explaining that life insurance is just a precaution, like wearing a helmet when biking or a seatbelt while in the car. You might say, “We don’t expect anything bad to happen, but it’s there to keep us safe, so we don’t have to worry.” This keeps the focus on safety rather than fear.
“Why do we need it?”
In this scenario, try comparing it to saving for emergencies. You could say, “Life insurance is there to support the family, like a backup plan, in case we need it.” If you have a policy for them, explain that it’s something that will grow over time and give them more options in the future.
“Can kids get life insurance too?”
If they ask about child life insurance, you can explain that some people buy policies for their kids or during early adulthood to give them extra financial options as they grow up.
Ways to involve kids in financial planning conversations
Involving kids in family financial planning can make them more confident and knowledgeable about handling money as they grow up. Here are a few ways to make financial conversations accessible and positive.
Discuss family finances together
Having occasional family discussions about finances can help kids become comfortable with basic money topics. You don’t have to go into all the details – just let them know how budgeting, saving, and planning help keep the family secure. For example, you could explain the importance of setting aside money for essentials, fun activities, and future needs.
Set an example
Kids learn a lot by watching, so showing responsible financial habits is one of the best ways to teach them. Whether it’s budgeting, saving for a family goal, or even discussing life insurance, let them see how you make careful and thoughtful financial choices.
Encourage questions
Fostering an open environment where kids feel comfortable asking questions – about life insurance or any other financial topic – can be incredibly empowering. When they ask something, give them a simple answer and let them know it’s good to be curious. You might say, “I’m glad you asked! Finances are important, and I’m always here to answer your questions as best I can.” This openness reassures them that money topics aren’t off-limits and encourages them to keep learning.
Read age-appropriate books together
Financial literacy books for kids are a great way to create more interest in the topic. If they get an allowance, even better! Books like these can provide practical tips for children handling money and their interactive nature can help give kids a sense of control over financial decisions. The best part? Serenia Life members who are under the age of 13 receive a free copy of this book (while supplies last). You can sign up right here.
When and how often to have the conversation
Talking to kids about finances, especially topics like life insurance, doesn’t have to be a one-time event. Below are some tips for making these conversations natural and ongoing.
Choose the right time
Timing matters when introducing financial topics, so aim for a calm, non-stressful moment. This could be during a family dinner or a relaxed weekend afternoon. Bringing up life insurance or financial planning in a comfortable setting helps kids feel more at ease and open to listening.
Keep it open-ended
Let kids know that this isn’t just a one-time conversation and that they can ask questions whenever they have them. You might say, “Feel free to ask me about this anytime.” By keeping it open-ended, they’ll understand that they don’t have to have all their questions or thoughts figured out right away.
Revisit the topic as they get older
A kid’s understanding of financial topics grows over time, so revisiting life insurance and financial planning as they mature can be helpful. As they get older, you can gradually introduce new concepts or go into a bit more detail. By making it a regular, age-appropriate discussion, you help them gain a clearer understanding of finances over time.
Talk the talk. Walk the walk
Speaking with children – young and old – about topics like life insurance helps normalize “scary” or complex topics and fosters a responsible and financially aware mindset in kids. And raising children to understand the importance of financial planning? Invaluable.
Now that you’re clear on how to talk to your kids about life insurance, you may be ready to take the next step and purchase a policy for your child. Talk is good – but acting on your words is just as important! Lucky for you, you’re in the right place.
Why choose Serenia Life for child life insurance?
As a member-based organization whose roots go back nearly 100 years, we encourage kindness by sharing our profits through community outreach, fundraising, and unique member benefits that help Canadians support their family, their community, and the causes they care about. The more we grow, the more we can give.
We provide members with access to a growing collection of member benefits that make a positive impact on their lives and the lives of others. Benefits, such as:
- $1,000 post-secondary scholarships
- $250 seed funding towards fundraising events
- Free digital wills (value: $189), or money towards drafting/updating a will through a lawyer
- And much more!
Get a quote
A final thought: It will never be more affordable to buy life insurance than when they are young and healthy. To learn more about how life insurance fits into your child’s financial future, book a no-obligation consultation with a Serenia Life advisor to get a quote today!
