Rarely. Life insurance for children is seldom worth it in Germany: guaranteed interest on new contracts is capped at 1 percent, costs weigh on the first five years, and nobody needs death cover on a child. The tax advantage only applies once the child is 62. For a driving licence or university, a savings plan is more flexible and cheaper.
Legal figures and a premium comparison, not tariff prices.
Example
Typical range
Maximum guaranteed interest for new contracts
1 percent
Premiums of EUR 50 a month over 18 years
EUR 10,800 paid in
Child's saver's allowance
EUR 1,000 of returns a year tax free
Frühstart-Rente under the draft, age 6 to 18
EUR 10 a month, EUR 1,440 in total
As of October 2026.
The Frühstart-Rente is not yet law.
The premium total is a calculation;
whether and how much bonus is added is a guide value from advisory practice and differs by tariff.
Worked example
Child policy with EUR 50 a month from birth
An endowment policy paying out on the 18th birthday compared with the money paid in.
Premiums over 18 years
EUR 10,800
Guarantee at 1 percent, before costs
about EUR 11,800
Deduction for acquisition and administration
several hundred to over a thousand euros, depending on tariff
Tax on the gain at 18
full, but usually within the saver's allowance
Little more than the premiums is guaranteed. Anything above depends on bonuses that are not promised.
What is sold as life insurance for children
Child policies (Kinderpolicen) are usually one of three products: an endowment policy paying out at 18 or 21, an education policy with a fixed payout date, or a pension policy meant to be continued by the child until retirement. Parents or grandparents almost always pay the premiums.
Many include a premium waiver: if the paying parent dies, the insurer pays the remaining premiums. That is the real insurance part. The rest is an investment wrapped in insurance.
Why it is rarely worth it
The maximum guaranteed interest rate for new contracts is 1 percent. So little more than the premiums is guaranteed, often less once costs are deducted. Bonuses come on top but are not promised.
Under section 169 of the Insurance Contract Act, acquisition costs are spread over the first five years. If you stop after a few years because money is tight or plans change, the surrender value is often below what you paid. A savings plan can be paused or withdrawn at any time.
The tax side helps little. Only half the gain is taxed if the money is paid out after 12 years and after the 62nd birthday. A payout at 18 does not qualify. Then the whole gain counts, although the child as a taxpayer has an own saver's allowance (Sparer-Pauschbetrag) of EUR 1,000 a year.
Route
Guarantee
Flexibility
Tax on returns
Endowment policy for the child
premiums less costs, interest at most 1 percent
low, early surrender often at a loss
full if paid before 62
Fund savings plan in the child's name
none
high
child's saver's allowance
Savings plan in the parents' name
none
high, parents keep control
parents' saver's allowance
Frühstart-Rente, planned
none
locked until 65
only in old age
Death cover on a child: why it achieves nothing
Life insurance is meant to replace money that is missing after a death. Nobody lives on a child's income, so a high death benefit on a child serves no purpose.
German law also sets a limit. Under section 150(3) VVG, insuring a minor requires the child's consent if the policy is to pay more than normal funeral costs on death before the seventh birthday. So check what a policy would pay on the child's death; a high amount only costs premium.
When a child policy can make sense
If grandparents want to invest a fixed amount safely for a grandchild and the money should not flow before adulthood, a policy with a premium waiver on the payer's death has an argument. Still compare it with term life insurance on the payer plus a savings plan.
A pension policy running for decades until the child's retirement can work if costs are very low. A contract the child takes over at 18 does, however, tie the child to choices the parents made.
What to do instead
The most important protection for children is cover on the parents: term life and disability insurance for each earning parent. Money for a licence, university or a first flat is better kept in a savings plan you can adjust.
For children born from 2020, the government plans the Frühstart-Rente: EUR 10 a month from age 6 to 18, EUR 1,440 in total, invested until 65. As of October 2026 this is a draft law with a planned start on 1 January 2027.
If a child policy is already running
Do not cancel in anger. First check surrender value, guaranteed rate and costs. An older contract with a higher guaranteed rate may be worth keeping. If you need the premium money elsewhere, making the policy paid up is often cheaper than cancelling.
Step by step
Decide what the money is for: education, licence or the child's retirement.
Protect the parents first: term life and disability cover.
In any offer look at guaranteed rate, effective costs and surrender values in the first years.
Compare with a savings plan at the same monthly rate.
For a running contract check making it paid up before cancelling.
Checklist
Purpose and payout age decided
Parents covered with term life and disability insurance
Surrender values of the first five years known
Premium waiver on the payer's death checked
Comparison with a savings plan done
Common mistakes
Buying a child policy while the parents have no term life cover
Counting on tax advantages that only apply from 62
Cancelling after a few years and taking the cost hit
Agreeing a high death benefit on the child
Questions and answers
Frequently asked
Is life insurance for children from grandparents worth it?
Rarely.
A savings plan the grandparents keep in their own name and give later is more flexible.
The policy has one advantage if premiums should continue after the payer's death.
Who owns the money from a child policy?
The beneficiary, usually the child.
With a payout at 18 the child decides what to do with it.
Is an education policy better?
It is an endowment policy with a fixed payout date, with the same drawbacks: low guaranteed rate,
early costs and full tax on the gain before 62.
Can I make a child policy paid up?
Yes, usually above a minimum value.
The contract continues with the money saved, and you lose less than by cancelling.
What about the Frühstart-Rente?
It is planned but, as of October 2026, not yet passed.
The money is to go into a depot and only be available from 65.
