Not in all cases. Many hotels and airlines have "lifetime status" based on achieving a certain level of loyalty in the past. I have United Gold for life even if I don't fly a single mile with them because I got to 1million lifetime miles. Now I use them once or twice a year but still get the benefits (free economy plus, and Star Alliance lounge access etc). I also have Marriott Titanium for life (not awarded anymore) even if I don't stay a single night with them because I stayed a certain number of nights with them over many years. Most of my stays now are with the Marriott timeshares, but when I do stay at hotels I get the benefits of free breakfast, lounge access etc.
As far as kids, if parents paid for their flights and they got to lifetime status, they keep it even if they don't fly with that airline ever again. With hotels, obviously only one person gets the credit for the stay.
I don't see what there is to gain by purging kids who got to
DCL Gold or Platinum. One day some (or many) of them will indeed cruise. If they have DCL status, they are much more likely to pick DCL themselves. Seems a bit shortsighted.