A thoughtful gift: Buying life insurance for children or grandchildren

Gifting life insurance is a great way to show your children or grandchildren just how much they mean to you. It may be a little different from what they would expect, but here are a few reasons why life insurance for kids makes a great gift.

Watch this video about gifting life insurance to children.

Grandfather and Grandson drinking milk together in their kitchen.

The gift of gifting life insurance to children.


1. Life insurance can last a lifetime.

Whole life insurance provides death benefit protection, creates a living legacy that will accumulate cash value with each passing year, and may help your child or grandchild get a head start on their financial future.

2. It won’t wear out or fall apart.

A life insurance policy purchased for your kids or grandkids today can still be there and increasing in value years from now, if you continue to pay the policy premiums. That’s something that conventional gifts don't offer.

3. Life insurance has accumulation potential.

Most gifts lose value over time, but a whole life insurance policy has the potential to accumulate cash value each year. That cash value can be borrowed against for things such as a down payment on a home, to help pay for college, to fund a business opportunity, or to provide a comfortable retirement.

Grandparents playing with their newborn grandchild in their living room.

4. Tax advantages1

Under the current law, cash values that accumulate in the policy are tax deferred. Even when cash values are borrowed, there are no tax consequences in many instances. Proceeds received by beneficiaries are also generally not taxable as income. Speak with your tax advisor for more details.

5. Lower premium rates for insuring a child.

Premiums generally increase with age. However, with whole life insurance, it’s possible to lock in the premium at the child’s current age for life.3

6. It can help guarantee future insurability.

Once the policy has been issued, coverage cannot be canceled if all required premiums are paid. Also, if a Policy Purchase Option (PPO) Rider2 is included with the policy, the insured has the right to increase coverage at designated dates, regardless of insurability.

When you insure a minor child or grandchild, the life insurance policy is generally owned by the purchasing adult until the child reaches the age of majority as defined by state law. When the child reaches the age of majority, ownership of the policy can be transferred to the child.

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Want to learn more about life insurance for a child or grandchild?

A New York Life financial professional can help determine what’s right for you and your grandchild.

There may be tax implications for policies recognized as modified endowment contracts (MECs), or if you partially surrender a policy in which the surrender exceeds the cost basis of the policy. Distributions, including loans from an MEC, are taxable to the extent of the gain in a policy and may also be subject to a 10% additional tax if the owner is under the age of 59½.

2 The new policy must have a face amount of at least $25,000, and the charges for the PPO Rider will vary based on the payer’s risk class and the face amount.

3 The guarantees of a Whole Life policy are based on the claims-paying ability of the issuer

The policy form number for New York Life Whole Life Series of products is ICC18217-50P (4/18). SMRU: 524850