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Life Insurance for Grandchildren

Sep 29, 20219/29/2021

Family

You love being a grandparent, and you couldn’t have imagined just how much joy it would bring to your life. But you worry for your grandchildren, too. You worry about the future, about the big dreams they have now and whether they’ll be financially prepared to make those dreams reality. Here’s the good news: helping your grandchild with homework or ensuring they get good grades isn’t the only way to make an impact.

Life insurance for grandchildren is a crucial way to help prepare them financially. We’ll explain what putting life insurance in place can do.

Understanding life insurance

Life insurance is a great way to protect the ones you love the most, including your grandchildren. It provides not only financial piece of mind, but also may help cover costs like college tuition and may provide access to increased coverage in the future. And should the unthinkable happen, it provides a death benefit to whomever you choose.

Insurance Options

Types of life insurance include permanent, which provides coverage throughout your lifetime, and term, which provides coverage for a certain amount of time and may offer an option to convert to permanent insurance after the initial term ends. Some types of permanent life insurance build cash value over time, which can later be accessed with a loan or partial surrender1.

You can use the funds in any number of ways; the possibilities go beyond education costs. So, if your grandchild wants to start a business, buy a home or run for mayor, the funds may be able to help with that too.

Life insurance for grandchildren could mean eligibility later in life

Most people assume life insurance is a given — buy it, pay and go. But that’s not always how it works. Conditions that develop over time may cause you to become ineligible for life insurance protection. Purchasing life insurance for your grandchildren at a young age could help them continue coverage later.

Here are two more reasons to cover the young people in your life with life insurance sooner rather than later:

  • Factors like health and age can increase rates
  • The criteria you must meet to get life insurance increases with age

After you purchase whole life insurance, the premium rates will never go up. You can transfer the certificate to your grandchild after they reach a certain age, and they can continue making payments to maintain coverage throughout their life. There are also options to complete paying premiums for whole life insurance within 10 or 20 years2, so your grandchild has coverage for life but doesn’t need to worry about payments.

If you purchase term life insurance, your grandchild may be able to convert to permanent coverage easily when the term ends. There are usually no additional requirements like medical tests3 for a conversion of this type.

Insurance protection

It’s almost impossible to think about a young person dying. But the unexpected happens when we least expect it, and often when we are least prepared. That’s why when a child passes away, we so often see communities rally together to raise money for the family.

When your grandchild has life insurance in place, in the worst of situations, your child won’t have to worry about how to pay for funeral expenses. Together, the family will be able to focus on grieving and finding a way to move forward.

The Plan

If you’re just beginning to look at options for helping your grandchild with their future financial needs, your local WoodmenLife Representative can help.

 

Legal Information

  1. Loans and withdrawals will reduce the policy’s death benefit and available cash value.  Excessive loans or withdrawals may cause the policy to lapse.  A loan, withdrawal or surrender may be a taxable event.  For tax advice, consult with your professional tax advisor.
  2. There may be tax implications for policies recognized as modified endowment contracts (MECs). Distributions, including loans, from a MEC are taxable to the extent of the gain in a policy. They may also be subject to a 10% additional tax if the owner is under age 59½.
  3. Up to age 72.

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