How can grandparents provide for their grandchildren?
In short
How can grandparents provide for their grandchildren in Germany? Most simply with a savings plan and with child disability or child accident insurance, about EUR 50 to 421 a year. Gifts to a grandchild are tax free up to EUR 200,000 per grandparent within ten years. The same allowance applies when grandchildren are named beneficiaries of a life policy.
Published premiums and legal limits for providing for grandchildren.
Example
Typical range
Child disability insurance, good tariffs in a test
about EUR 107 to 421 a year
Child accident insurance, EUR 100,000 base sum with progression
about EUR 50 to 100 a year
Tax free gift per grandparent to one grandchild within ten years
EUR 200,000
Tax free investment income of the grandchild per year
EUR 1,000
Figures from published tests and German law, as of October 2026.
Your premium depends on the child's age and cover; we obtain the exact quote.
Worked example
Grandmother saves EUR 50 a month for a newborn grandchild
What builds up by the 18th birthday. The return is an assumption, not guaranteed.
Paid in, EUR 50 × 12 × 18
EUR 10,800
At an assumed 0 percent
EUR 10,800
At an assumed 4 percent a year
about EUR 15,800
Child disability insurance on top
about EUR 107 to 421 a year
The gift stays far below the EUR 200,000 allowance. No gift tax is due.
Saving for grandchildren: in whose name?
If you open an account or portfolio in your grandchild's name, the money belongs to the child. Until the age of 18 the parents manage it as part of parental care (Section 1626 BGB), after that the grandchild decides. The grandchild's investment income is tax free up to EUR 1,000 a year through the saver's allowance.
If grandparents save in their own name and give the money later, they keep control but pay tax on the returns themselves. For grandchildren this is often the better route if you do not yet know when the money will be needed, for example for a driving licence, studies or a first flat.
Insurance that makes sense for grandchildren
Child disability insurance (Kinderinvaliditätsversicherung) pays if a child becomes permanently disabled through illness or accident; good tariffs cost about EUR 107 to 421 a year in a test. Child accident insurance is cheaper at EUR 50 to 100 but pays only after accidents. Grandparents can pay the premium for their grandchildren.
Agree on this with the parents so the grandchildren are not insured twice and health questions are answered correctly. An education or endowment policy on the grandchild rarely pays off, because costs and the guaranteed rate leave little over.
Option
For grandchildren
Guide value
Savings plan in your own name
grandparents keep control
freely chosen
Account in the grandchild's name
belongs to the child, parents manage
income up to EUR 1,000 tax free
Child disability cover
illness and accident
about EUR 107 to 421 a year
Child accident cover
accidents only
about EUR 50 to 100 a year
Life insurance with beneficiary
paid outside the estate
allowance EUR 200,000
Life insurance and inheritance for grandchildren
If you name your grandchildren as beneficiaries of a life policy, the payout goes directly to them and not into the estate (Section 159 VVG). For tax purposes it counts as an acquisition on death (Section 3(1) no. 4 ErbStG), and the allowance for grandchildren is EUR 200,000 (Section 16 ErbStG).
If the grandchild's parent has already died, the allowance rises to EUR 400,000. Gifts within ten years are added together (Section 14 ErbStG); grandparents who start early can use the allowance for their grandchildren more than once.
When the grandchildren stay with you: liability and supervision
Anyone who takes on supervision of a child by agreement can be liable for damage the child causes to others if they did not supervise properly (Section 832 BGB). Your own personal liability insurance covers your legal liability as grandparents. The grandchildren themselves are not covered by it, but by their parents' policy.
Children under seven are not liable themselves (Section 828 BGB). If a small grandchild damages your things, there is often no claim that a liability insurer would have to pay. Some family tariffs of the parents pay such damage voluntarily; that depends on the policy terms.
What grandparents do not need for grandchildren
Funeral or endowment insurance on a grandchild is unnecessary, because no child has income to replace. Expensive combined products of saving and accident cover are usually worse for grandchildren than a savings plan plus separate child disability insurance.
Norman Nammert works as an insurance broker (Versicherungsmakler) and shows grandparents how to keep cover and saving for their grandchildren separate. The insurer pays the commission, so the advice is free for you. Tax questions are for your tax adviser.
Step by step
Ask the parents what is already insured and saved.
Decide whether the money is invested in your name or the grandchild's.
Choose child disability or child accident cover and pay the premium.
Check beneficiaries on your life policies and add the grandchildren if you wish.
Document larger gifts and keep the ten year period in mind.
Checklist
Agreed with the parents
Savings form and account holder decided
Cover for illness, not only accidents
Own personal liability in place
Beneficiaries up to date
Gifts below EUR 200,000 within ten years
Common mistakes
Buying an expensive education policy on the grandchild
Saving in the grandchild's name and later wanting to use the money
Choosing child accident over child disability cover although illness is more common
Insuring twice because the parents already have a policy
Questions and answers
Frequently asked
How much can grandparents give grandchildren tax free?
Each grandparent EUR 200,000 to each grandchild within ten years,
EUR 400,000 if the grandchild's parent has died.
Can grandparents take out insurance for their grandchildren?
Yes, for example child disability or child accident cover.
Agree on it with the parents.
Am I liable if my grandchild breaks something while with me?
If you took on supervision and did not supervise properly, you can be liable.
Your personal liability insurance covers that.
Are my grandchildren covered by my liability policy?
No.
Only your own children in first training are covered.
Grandchildren are covered through their parents.
Is life insurance for grandchildren worth it?
As a savings contract on the child, rarely.
Your own life policy with grandchildren as beneficiaries can make sense.
