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The holidays are coming, and you may be wondering what to give your children or grandchildren. Life insurance can be the ideal gift. When purchased for a younger person, the cost of premiums is far lower. Whole Life insurance has the benefit of being an asset that can be borrowed against, provide tax benefits, and financial security.
Buying an Insurance Policy for a Child
Purchasing an insurance policy for a child under eighteen is a terrific way to lock in low premiums when a child is healthy and will help ensure they qualify for life insurance later, even if a health condition develops. You will need to pay the premiums for the child until they enter the workforce, or you can continue to pay the premiums. Once the child reaches adulthood, you can transfer ownership of the insurance policy to them. The cash value of the policy can help the person pay for college or afford a down payment on a first home.
Buying Insurance for an Adult Child
If your child is already an adult, buying them the gift of a life insurance policy can help them gain more financial security if the unexpected occurs. The death of a father, mother, husband, or wife can leave the family struggling to survive. That is when life insurance is particularly meaningful, as the benefits are issued rapidly and will be needed, particularly if the estate must go through probate or a large final tax bill is owed.
How to Buy Life Insurance as a Gift
To purchase a life insurance policy for another person, you must have what is termed an “insurable interest” in that person. This is the basis for the purchase of all life insurance policies. A family member may suffer financial stress when a family member dies or is incapacitated. The policy cannot be written without the knowledge of the insured, or in the case of children, the parents. Purchasing life insurance for a young person can provide many significant benefits.
Giving to Your Charity: A Holiday Life Insurance Gift
You can purchase a life insurance policy to benefit your favorite charity or religious institution. Upon your death, the benefits from the insurance policy flow to the charity, providing much needed – and appreciated – financial support to the group. While you are living, you remain the policy owner and pay the premiums, and name the charity of your choice as the beneficiary. You can also name more than one beneficiary, so the death benefits go to more than one person or charity. This strategy can provide some tax advantages as well.
Gifting a Life Insurance Policy
When considering what to purchase for your loved ones for the holidays, a life insurance policy may not be top of mind – but these gifts are appreciated. The best policies are whole life policies, as they build a cash value over time, and become an asset that can be borrowed against by the owner. Should the covered person pass away, the cash benefit is paid without incurring any tax liability.
If you need help buying an insurance policy as a gift, our friendly local agents can explain your options, and find the policy that will work best for you and your budget, and provide the best benefits to your loved ones or the charity of your choice.