 Teaching kids about insurance: Why it matters early

5 June 2026

3 minute read

My 1Life policy

Teaching your children about money often starts with saving, budgeting and spending wisely. But there is another important financial lesson many families overlook: insurance. As your children grow, they begin to notice how the household budget works, why some expenses are necessary and how families prepare for unexpected events. Teaching kids about insurance from a young age can help them better understand financial responsibility, risk and long-term planning. This Youth Month, consider starting age-appropriate conversations about why insurance matters and how it helps protect your family’s financial future.

Children learn about money from young ages

Children learn about money from a very young age, sometimes as young as 3, according to studies. Your kids see you spending money at the shops, on petrol and at the takeaways and can see the concept of money as a means of exchange in practice. Research show that the earlier we learn about money the better we manage it in later life, including saving and staying out of debt.

As a parent you play a key role in teaching your kids how to manage money well. You often spend time explaining the budget and how to save. Teaching your family how insurance works and why you have it is as important.

Ages 2 to 6 years: money as a means of exchange

Toddlers are learning the basics of money and that it is a medium of exchange. Give the cashier money at the shops and you get your groceries. Pre-schoolers often get pocket money so they can spend a little too. Your toddlers need to get to grip with the basics, so insurance is for another day when they are older. They may ask what a policy is when you need to use insurance to pay for a funeral or replace a stolen item. You can explain to them that you have an insurance policy that pays this amount for a claim.

Ages 6 to 12 years: spending, saving, budgeting

What they are learning

Your school-going pre-teens are exposed to a wide, wide world, including many financial concepts such as saving and the world of digital banking such as on apps and online. They will understand pocket money, how to earn money and how to spend it. They will also become aware of the household budget and the various items in it.

What to tell them about insurance

The basics will be an excellent start.

The concept of insurance: you pay a premium for insurance to an insurance company who will pay a claim if something happens.
Why you have insurance: for financial protection so that you and your family have money if you need it.
Money in the budget isn’t only spent on goods: it is also used to save, invest and pay for services such as insurance to keep your family financially stable and independent.

Ages 13 to 18: everything good and bad in the money world

What they are learning

They’re teens so pretty much everything! Your teens are learning complex matters at school in many subjects and are starting to understand the many challenges life gives us. They are able to understand many money matters including budgeting, saving for specific goals such as retirement and investing in shares, property and more.

What to tell them about insurance

Reinforce the basics and explain the technical terms and conditions.

The concept of insurance: that a premium is paid to an insurance company who will pay a claim if something happens and all the terms and conditions are met.
Different types of insurance: life and funeral cover as well as short-term insurance such as car and household cover for car accidents, damage and theft.
That an insurance policy is a contract: you have obligations to pay the premium and disclose any required information, the insurer has to pay valid claims in good time.

Top tip: take the Mad Money Skillz course from Truth About money for free with your teenager to help them manage their money well and set them on the road to financial independence.

Keep the conversations going

Teaching kids about insurance early helps them build strong financial habits and understand how to protect their future. Share your financial knowledge with your kids and set them up for financial independence later in life. It’s one of the best money gifts you can give them. Talk to them about money and insurance often, and why managing their finances well is so important. Your kids will develop good money habits that they in turn can pass on to their families.