Are you looking for a truly valuable gift for an upcoming birthday, high school graduation, wedding, college graduation, or to celebrate the birth of a child or grandchild? Permanent life insurance creates a living legacy that will accumulate cash value with each passing year.
- It won't wear out or fall apart. Life insurance can last a lifetime, provided you continue to pay premiums. The policy you purchase for a son or daughter today can still be there years from now, providing death benefit protection for this child's own son, daughter, or spouse.
- It has accumulation potential. Most gifts lose value over time. A permanent life insurance policy, on the other hand, has the potential to accumulate cash value each year. Cash values can be borrowed for any purpose to provide a down payment on a first home, to help pay for college, to capitalize on a business or other opportunity even to help fund a comfortable retirement decades from now. (Note: Borrowing or otherwise using cash values can reduce the death benefit and cash value.)
- There are tax advantages. Under current law, cash values that accumulate in the policy are tax deferred. Even when cash values are borrowed, there may be no tax consequences in many instances. Finally, proceeds received by beneficiaries are generally not taxable as income. Consult with your tax advisor for more details.
- Premium rates may never be lower. Premiums generally increase with age. However, with permanent life insurance it is possible to lock in the premium at the insured's current age for life.
- This policy can help guarantee future insurability. Once the policy has been issued, coverage cannot be canceled as long as all required premiums are paid. Also, if a Policy Purchase Option (PPO) Rider is included with the policy, the insured has a right to increase coverage at designated dates, regardless of insurability.
Juvenile insurance is life insurance that insures the life of a minor or young adult. If the insured is a minor, the policy is owned by the purchasing adult until the child reaches the age of majority as defined by state law (with ownership transferred at a later date). The beneficiary is generally a guardian or parent. With adult insureds, the policy is generally owned outright by the insured, who selects the beneficiaries.
You have two choices regarding how premiums should be handled. First, you can take a lump sum (such as $10,000) that would otherwise be given as an outright gift to the child or grandchild; instead, purchase a single premium life insurance policy for whatever face amount that sum buys. The advantage is that no further premiums are required. (There are tax consequences associated with gifting amounts. You should consult with your own tax professional for tax advice.)
The second choice is to select the premium or death benefit desired. Then, make the scheduled premium payments. (Note that there may be gift tax consequences, since the premium is considered a gift to the insured. Consult your tax advisor before acting.)00354937CV
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