Life Insurance – The Unexpected Holiday Gift for Grandchildren

Thanksgiving flew by, and now here we are, deep in the holiday season. And if you’re a grandparent, finding the perfect gift for your grandchildren can be challenging. While the hottest new toys and gadgets offer an exciting present to unwrap, they’re also a common gift that loses value quickly. If you’re looking for a holiday gift that provides longer “shelf life,” you may want to consider purchasing a life insurance policy for your grandchildren. Here are some details to consider as you prepare your gifts:

 Key Benefits of Gifting Life Insurance

 1.      Provides lasting value

A life insurance policy is a benefit that lasts a lifetime. When you gift life insurance to your grandchildren, its value will stick around and can even grow throughout their life. If you purchase permanent life insurance for them, the policy will grow tax-deferred. And as long as they are alive — and the policy remains actively funded — they’ll continue to grow the cash value.[i]

 2.      Has some tax advantages for you

Purchasing permanent life insurance as a gift for your grandchildren can help them grow tax-deferred money — and can help you support tax-friendly financial strategies. If you will have high income and estate taxes, then you may need to find ways to reduce your tax liabilities. By purchasing a policy for your grandchild, you can minimize this liability by creating an additional shelter from high taxes.[ii]

 3.      Can capture a lower premium for life

The age that a person purchases their permanent life insurance can affect how much their premiums cost — and these rates lock in for the life of the policy. For this reason, purchasing a policy for a grandchild when they’re young will provide them with much lower premiums than if they were to purchase that same policy on their own 30 years later. You can help your grandchildren’s future finances by locking in their premiums today, when they’re younger and healthier.[iii]

 4.      Can help set up grandchildren for financial stability

A person is never too young to start healthy financial habits. And purchasing a life insurance policy for your grandchildren can help support their financial wellness, even at a young age. Benefits such as growing a tax-deferred cash value in the life insurance can help your loved one have access to future funds, should they need an income boost. You’re also supporting them by giving them a death benefit protection, which is always a helpful risk-planning strategy in life.[iv]

 Each person has a unique life that drives what decisions make the most financial sense. If you’d like to explore if gifting a life insurance policy to your grandchildren is right for you, we’re happy to talk. Please contact us at (518) 581-1642. We look forward to helping you make the most of your gifting opportunities this holiday season.

 

Footnotes, Disclosures & Sources

i) http://www.forbes.com/sites/northwesternmutual/2016/08/17/3-things-to-consider-before-giving-monetary-gifts-to-your-grandkids/#679ec56e7110

ii) http://www.investopedia.com/articles/pf/07/permanent_life_insurance_taxes.asp

iii) http://www.investopedia.com/articles/personal-finance/022615/how-age-affects-life-insurance-rates.asp

iv) https://www.newyorklife.com/articles/perfect-gift-for-kids-or-grandkids/

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