Guide to Life Insurance and Adoption

A couple sit with their adopted child in between them as they sign her adoption papers

The main priority when purchasing life insurance is to ensure financial protection for your family and loved ones. In the event that something happens to you, you’ll want to be certain that any financial burden is taken care of.

Whether you’re seeking to grow your family through adoption or are adopted yourself, shopping for a life insurance policy may look a little different. Let’s walk through some common questions and concerns around adoption insurance, foster care insurance, and buying life insurance if you’re adopted.

Do I need life insurance to adopt a child?

Depending on the state you live in—such as in Mississippi—life insurance can be required for adopting a child. Some adoption agencies may even require it, too. Even if it’s not required, though, you should still consider shopping for life insurance as an adoptive parent. Purchasing a life insurance policy as soon as possible is important for a variety of reasons.

One major reason is that life insurance premiums increase every year you age. The longer you wait to purchase a life insurance policy, the more you’ll pay in premiums. You can keep your insurance affordable by buying early.

How Being Adopted Impacts Your Life Insurance

Being adopted doesn’t impact your life insurance application, with one exception: family history. Life insurance companies have a detailed process for assessing risk that involves several factors, including age, income, hobbies and behaviors, employment, and—of course—the results of your medical exam. As an adopted person, you likely have answers for the majority of these questions, but it’s good to be prepared in the case you don’t.

Why Family History May Impact Life Insurance Rates

Insurance companies use your biological family history to help determine your risk of illness or disease down the road, leading to increased life insurance rates. In the case of adopted children, that family history may or may not be readily available.

There are two possible scenarios that could come from this. 

  1. If you have no information about your biological family history, it will be marked unknown on your application and won’t be counted against you. Additionally, your application will note that you’re adopted.
  2. If you are aware of your biological family’s medical history, it’s important to be as specific as possible. Give the underwriter as much detail as you can, disclosing history of disease, illness, or other genetic markers.

Whether you know your family history or not, be sure to answer the life insurance application questions to the best of your knowledge as honestly as possible. Intentionally leaving information out is considered life insurance fraud. Failure to answer the questions truthfully could lead to the cancellation of your policy, which means the death benefit won’t be paid out to your beneficiaries.

Should I buy life insurance for my child?

Insurance companies follow strict rules when it comes to issuing life insurance for children. In most states, the only parties eligible to insure children under the age of 17 are birth or adoptive parents and court-appointed legal guardians.

In addition, children that are 15 years old or older must sign any life insurance application that someone takes out on them. Other parties—such as grandparents—may want to buy insurance policies for children. They’ll have to get written consent from the child’s parent or legal guardian.

In addition to limits on who can buy life insurance policies on children, insurance companies typically have limits on the dollar amount a policy can cover. Companies can refuse your request to buy life insurance on someone else, including children, if you’re attempting to insure them for more than the maximum death benefit.

Something else to consider with life insurance is family history. Insurance companies look at your health history and other genetic health traits during the underwriting process. These factors could influence an insurer’s decision to approve or deny a life insurance policy for your biological child.

Buying Life Insurance for Your Adopted Child

Your adopted child is just as eligible for life insurance as biological children would be. Insurance companies can’t discriminate against children whether adopted or biological, and they’re afforded the same rights for as long as you have legal guardianship.

Life insurance companies focus on insurable interest when they determine if someone should be a beneficiary for your insurance policy. This insurable interest essentially states that the person or parties involved will suffer financially if you die.

While this might cause you to consider naming your child as your life insurance beneficiary, this is not actually a good idea. It is typically in a minor’s best interest to appoint another adult—potentially a loved one who will be looking out for the child in the event of your passing—as a beneficiary, at least until your child is of legal age. 

Naming Your Child as Your Life Insurance Beneficiary

You should generally name an adult as the primary beneficiary of your life insurance policy. Life insurance companies can only pay out the death benefit to legal adults. In order to ensure this benefit goes where intended, you should name a trusted guardian as the beneficiary or establish a trust. Combine this with a will and other final directives, and you can be reasonably certain that the death benefit will go where you’ve designated.

Buying Life Insurance if You’re in the Process of Adopting a Child

If you’re currently seeking life insurance to help provide for your foster or future adopted children, you should—as we stated above—name someone you trust as the beneficiary. This can help you protect these children and provide for them in the event of your death. If you do plan on naming the adopted child as the beneficiary, at least wait until the adoption is finalized.

Adoption is a substantial life change and a big event, which means you may want to reexamine your current life insurance policy and needs once it is finalized. Update your life insurance if necessary and make the appropriate adjustments to ensure your loved ones are provided for.

SelectQuote can help protect your family with the right amount of life insurance.

Whether you have questions about life insurance policies for adopted or biological children, SelectQuote can help you buy life insurance online. Our licensed insurance agents can help you find the right type of life insurance policy to help meet your needs.

We do the shopping. You do the saving.