Let’s start with a basic question: What is the purpose of insurance?
If you decide to protect your child against risks that threaten their health, then insurance makes sense. However, if you want to secure financial means for your child’s future, then child life insurance is a completely unsuitable tool.

In general, insurance should cover the client in case of an income loss – whether long-term or short-term. Children don’t have an income, yet in cases of serious accidents or illnesses, the financial impact on the family can be significant.

1. Risk Insurance for a Child Makes Sense

Insurance for permanent consequences of an accident, serious illness, or disability definitely makes sense. In the event of a severe injury or illness, costs for treatment, rehabilitation, or special equipment can reach tens of thousands of euros. Such insurance covers expenses that truly arise.

For younger children, daily allowance insurance in case of an accident or hospitalization can also make sense, because even if the situation is not permanent, one parent usually has to stay home or in the hospital with the child, losing their income.

Example: A child suffers a spinal fracture in an accident and becomes partially paralyzed – they may require home adjustments, a wheelchair, spa treatment, and long-term care. Quality disability insurance can help the family cover these costs.

2. Investment Life Insurance Does Not Make Sense

Child insurance policies often combine insurance and investment. Insurance companies charge high fees, and during the first years, a large portion of the payments goes to insurance costs. Moreover, these products are often non-transparent, with below-average returns and additional fees.

Returns from the investment portion of life insurance are also subject to a 15% tax. In contrast, investments in mutual funds or ETFs are exempt from capital gains tax after 3 years of holding.

Example: From a profit of €400 on a policy, you would pay €60 in tax. With investments, the tax would be zero.

3. Insuring a Child as a Rider on a Parent’s Policy Is More Efficient

If you still want to protect your child against certain risks, adding accident, serious illness, or disability coverage to a parent’s policy is inexpensive and effective. There is no need to create a separate policy with higher costs. Always choose pure risk life insurance.

4. Emotional Marketing vs. Rational Thinking

“Insurance sellers” and insurance companies play on emotions: “You want to protect your child, don’t you?” This rhetoric often targets fear, not logic. Financial decisions should be based on reality and data – not advertising and manipulation.

5. Smarter Ways to Secure Your Child’s Future

Instead of expensive investment life insurance, it’s more reasonable to:

• invest wisely – clearly define your financial goals and set your investments accordingly,

• insure the parents (breadwinners) – they are the ones who truly provide for the child,

• insure the child against serious risks that can have high financial consequences,

• create and maintain an emergency fund for unexpected expenses.

Conclusion

Investment life insurance for children is usually a poor-value product. Don’t let emotions influence you – make decisions rationally and based on real needs.

Whether it’s investment products or insurance, it’s important to have a professional financial advisor by your side. We can help you optimize your finances to your advantage. With the right financial products and a proper strategy, you will be better prepared for whatever life brings.