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The Grandparent Revolution

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  • Are you part of the Grandparent Revolution?
  • Do you want to do something for your children and grandchildren?
  • What is your role as a grandparent?

The Grandparent Revolution is under way. Baby Boomers, the tie–dyed longhairs who marched in the streets in the 1960s, are now changing their grandchildren's diapers. And they're loving it. The best part: They're taking advantage of the many opportunities to help their children and grandchildren in ways that count. Here is what one new grandfather did:

Life Insurance on the Parents
When Olivia was born, John sent a dozen roses to the hospital. Then he called his New York Life agent and purchased $100,000 of life insurance on his daughter. He knows that she and her husband are living on a tight budget, with almost no life insurance.

His daughter owns the policy and is insured, he pays the premium, and the beneficiary is a trust fund for Olivia. So, if his daughter dies prematurely, his granddaughter will have assets to help meet the expenses of raising her and to pay for her education.

Life Insurance on the Grandparents
John also purchased an additional $200,000 on his own life. He named several beneficiaries, including his daughter. That way, in the event of his death, the proceeds will be paid as a tax–free death benefit to help his daughter and her husband achieve their financial objectives and, pay college costs.

A Coverdell Education Savings Account for the Grandchild
. A Coverdell Education Savings Account (ESA) is an account created as an incentive to help parents and students save for education expenses. John started an education fund soon after his granddaughter's birth. Every year, he can contribute up to $2,000 for Olivia's benefit.

This means that, under current law, he has the potential to contribute up to $36,000 over the next 18 years. That, with interest, has the potential to grow into a respectable college fund when Olivia leaves for school. This also helps remove assets from John's estate since, under current law, he can gift up to $12,000 in 2006, without gift–tax consequences.

Other Education Funding
John also looked into establishing a state–sponsored 529 Plan*, which will allow him to contribute additional amounts to help with Olivia's education. (*529 plans are offered by properly registered representatives of NYLIFE Securities LLC. Member FINRA, a subsidiary of New York Life Insurance Company.)

Life Insurance on the Grandchild's Life
By his granddaughter's first birthday, John purchased a juvenile permanent policy on her. He made his daughter the beneficiary and owner. He paid the premiums each year. When Olivia is an adult, her mother has the option to eventually transfer ownership of the policy to her.

At first, his daughter was uncomfortable with the idea. However, he explained that the purpose of juvenile insurance is not to attempt to put a value on the child's life. Instead, the objective is to lay the foundation for Olivia's own life insurance program. Besides, purchasing it now, at a young age, means that the premium is attractively low, and it will never increase.

Someday, when Olivia is grown, she will own the policy, along with any potential cash value that may have accumulated. This policy can provide protection for her own family in the event of her parents' death. Also if it is determined that the full death benefits is no longer needed, the cash value can be used for a down payment on her first home, to start a business or for any purpose she chooses. Cash values can be accessed through loans, which accumulate interest and ultimately reduce death benefit and cash value by the amount of the outstanding loan plus interest.

If you're part of the Grandparent Revolution, enjoy those kids, and if you want to really help them, contact your New York Life agent or NYLIFE Securities Registered Representative to discuss how you can help assure their long–term financial security.

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The Grandparent Revolution

CONSULT A REP NEAR YOU

Please complete and send the form below and we'll have a New York Life Registered Representative in your area contact you at your convenience.

  • *
  • *
  • *
  • *
  • *
    *
  • Phone*
    - -
  • Home or work?
    Home Work
  • Best time to call
  • Birth Date
    - -
    Why?
  • (please click only once)

  • * = required

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