Social Security is the primary form of life insurance for many families with children. For an illustrative young family — a 30-year-old worker earning $30,000-$35,000 a year with a spouse and two young children — Social Security disability and life insurance protection are each valued at over $550,000.
Currently, more children live in families receiving income from Social Security than live in families that receive Temporary Assistance for Needy Families (TANF). About 8.4 million children benefit from Social Security. They include 3.1 million children who receive benefits directly because a parent has died, become disabled, or retired, and an additional 5.3 million children who live with a relative receiving Social Security benefits. Children can collect benefits up to the age of 18, or until 19 if they are still in high school. The spouse of a worker who died can collect benefits to care for the worker’s child who is under age 16, or who is disabled.
Life insurance benefits for families with children are based on the deceased worker’s past earnings and the number of eligible children in the family. Larger families receive higher benefits, and a family maximum limits total payments to families of three or more beneficiaries. For families of the same size, survivors of low-income workers receive benefits that replace a larger portion of lost earnings than is the case for families of higher-earning workers. If a worker, whose earnings would have averaged $40,000 over a full career, had she lived, died at age 35 in 2015, annual Social Security survivors’ benefits for the family of a surviving spouse and two children would be about $29,844. This level of benefits would replace about 77 percent of the deceased worker’s earnings of $38,902 in 2014.