A gift they never knew they wanted
That’s right. You can give life insurance as a gift to your children or grandchildren--for birthdays, graduations, weddings and all of life’s big moments. Or just because it’s always a good thing to do.
Just think about all the tech gadgets and kitchen gizmos you’ve given your children over the years (we’re including adult children, too). Sure, they had that immediate “wow” factor at first, but now all they do is collect dust.
The gift of life insurance, though not quite as exciting as a new video game system or spa gift card, is something that will one day leave your kids and grandkids wondering what they ever would have done without it.
Why life insurance?
- Life insurance offers a lifetime of protection and financial security: Whether it's a gift for a child or young adult, the policy can provide a lifetime of financial protection, as long as the premiums are paid.
- It’s a gift that can increase in value over time: with permanent life insurance, every year the premiums are paid, the cash value in the policy grows. Buy it for a young adult, and the cash value can grow to be accessed via policy loans* for a number of purposes, like funding their children's education, or, if there is no longer a need for the full death benefit, supplementing their own retirement income decades from now.
- The cash value grows on a tax-deferred basis: The value that builds in your whole life policy is called cash value. This can accumulate considerably in the long term, especially since taxes on the cash value growth are deferred.
- It protects the child’s future insurability: Once the policy is issued, coverage cannot be canceled as long as all required premiums are paid. And if you buy the policy with a Policy Purchase Option, no matter what the state of that child’s future health, he/she will be able to buy more life insurance and have at least some protection for his/her own family.
Remember, life insurance premiums are based on age. So if you buy a policy while the child is young, the less you will have to pay in premiums. Also, buying now locks in the rate on a permanent policy at the insured's current age for life.
How the policy works
If the insured is a minor, the policy is owned by the adult who purchases it until the child is no longer a minor. Ownership can be transferred at a later date. The beneficiary is generally a guardian or parent. With adults, the policy is generally owned by the insured, who selects the beneficiaries.
Premiums can be handled in one of two ways. You can either make a single lump sum payment to buy a single premium policy. The advantage is that no further premiums are required.
The second choice is to select the premium or death benefit desired. Then, make the scheduled premium payments. With both options, be sure to check with your tax professional for any tax consequences associated with gifting money.
Talk with one of our agent to determine which policy best fits your needs. You can find an agent near you, click on the 'Talk to Us' button.
* Policy loans accrue interest and reduce death benefit and cash value.