The holidays are quickly approaching, and you may be trying to decide what you should buy your children or grandchildren as presents. A gift of life insurance can be just what the recipient needs. When purchased for an individual who is younger, the cost of the premiums is significantly reduced. The advantages of having whole life insurance include that it can be used as collateral for loans, it can provide tax advantages, and it can provide financial security.
Buying an Insurance Policy for a Child
A great way to lock in low premiums when a child is healthy is to purchase an insurance policy for a child who is under the age of eighteen. This will help ensure that the child is eligible for life insurance in the future, regardless of whether or not a health condition develops. You will have the option to continue paying the premiums for the child until they are old enough to get a job of their own, in which case you will be required to continue paying the payments. You will be able to transfer ownership of the insurance policy to the adult kid once they reach the age of majority. The cash value of the policy can assist the individual in meeting financial obligations such as the down payment on their first home or the cost of further education.
Buying Insurance for an Adult Child
If your child has reached the age where they are considered an adult, giving them the gift of a life insurance policy can help them acquire additional financial stability in the event that something unexpected happens. When a parent, spouse, or other important family member passes away, it can be difficult for the surviving members of the family to make ends meet. When this occurs, life insurance becomes especially important because the benefits are paid out quickly and will be required. This is especially true if the estate needs to go through the probate process or if a significant final tax bill is owed.
How to Buy Life Insurance as a Gift
It is required that you have what is known as a “insurable interest” in the individual for whom you are purchasing a life insurance policy in order to be allowed to do so. This is the rationale for the acquisition of each and every life insurance policy. When a member of the family passes away or becomes unable to care for themselves, other members of the family may experience significant financial strain. It is impossible to write the insurance without the insured person’s knowledge, or in the case of children, without the knowledge of the parents. The purchase of life insurance for a younger individual might bring about a multitude of important advantages.
Giving to Your Charity: A Holiday Life Insurance Gift
You are able to make a contribution to a cause or organization of your choosing by purchasing a life insurance policy in their name. After your passing, the charity will get the payout from the insurance policy, which will provide the organization with the much-required and greatly appreciated financial help it requires.
While you are still alive, you will continue to be the owner of the insurance, you will be responsible for paying the premiums, and you will choose the charity of your choice as the beneficiary. You also have the option of naming many beneficiaries, which means that the benefits can be distributed to more than one person or organization after your passing. Additionally, this method may result in certain favorable tax consequences.
Gifting a Life Insurance Policy
A life insurance policy is probably not the first thing that comes to mind when thinking about what to get your loved ones for the holidays; nonetheless, it is a gift that is very much appreciated. The greatest policies are whole life policies since they accumulate a cash value over the course of the policy’s lifetime, becoming an asset that the policyholder can borrow against. In the event that the covered person passes away, the cash reward is handed out without creating any further tax obligations.
Need Help?
If you need assistance purchasing an insurance policy as a gift, our helpful local agents are available to explain your options and help you find the policy that will work best for you and your budget, as well as provide the best benefits to your loved ones or the charity of your choice. If you have any questions, feel free to contact us.