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.
1 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