November 11, 2021
The Forever Gift: How to Gift Life Insurance to Your Loved Ones
Most of us have special youngsters in our lives that we want to help take care of, like our children or grandchildren. Year after year, celebrations like birthdays and graduations come along, and we want to do something special to show our love. Often, we purchase books, toys, clothing, or gift cards, which are all great gifts, but they typically come with a relatively short shelf life.
Have you considered providing a gift that could last an entire lifetime with lifelong benefits? Life insurance may not sound glamorous to a child or young adult, but it is something that will be fully appreciated down the road. BetterLife Career Agent Lisa Koerner explains, “Some members choose to gift life insurance policies to their children or grandchildren when they achieve certain life events, like graduating college, getting married, or having a baby.” She adds, “As a parent, it is always my goal to leave my son in a better position to fulfill his goals and dreams.”
You have the power to make a significant, lifelong impact on someone you love by gifting a life insurance policy.
Why Should I Gift Life Insurance to a Younger Person?
You might be wondering why you should purchase life insurance for a younger person, especially someone who does not yet have financial responsibilities. There are several important benefits:
- Life insurance rates are very budget-friendly when the insured person is young and healthy. By getting the person you love set up with a policy now, you are helping to lock in more affordable life insurance coverage while they are still insurable (in case health issues arise later in life).
- With a whole life policy, there is more time for the cash value to grow. The cash value can be used for any purpose and can serve as an emergency fund in difficult situations (more on cash value and whole life insurance later).
- The person you gift a BetterLife life insurance policy to will also have access to BetterLife’s Member Benefits, including our scholarships, Health Benefit, Orphan Income Benefit, and more.
- With some policies, an Accelerated Death Benefit Rider can be added for no additional cost, which allows them to take out a large portion of the death benefit early if they develop a terminal illness.
- You are helping the loved ones of the person you gift the life insurance policy to. If something happens, their parents, spouse, children, or anyone listed as the beneficiary will have an income tax-free* sum of money to help cover funeral costs and other expenses.
What Type of Life Insurance Works Best for Gifting?
We typically recommend purchasing a whole life policy for gifting to a child or young adult because it is guaranteed and can last a lifetime. Career Agent Lisa Koerner explains, “The policies I often recommend are Single Premium Whole Life policies or Limited Pay Whole Life policies that are completely paid for in ten or twenty years. Gifting a policy that is paid in full with a lifetime benefit ensures that the recipient never loses their policy because of a missed payment. They will always have access to the cash value or the death benefit.” BetterLife offers both of these types of policies, which offer lifelong protection without a lifetime of payments. Single Premium Whole Life and Limited Pay Whole Life policies offer:
- A guaranteed cash value that grows over time.
- The potential payment of dividends which can be used in several ways.
- The option to add an Accelerated Death Benefit Rider.
- Access to all of BetterLife’s Member Benefits.
Once it is established, the cash value of the policy can be accessed for any reason, like an emergency fund for unexpected events.** This provides an additional benefit to the recipient.
According to BetterLife Career Agent Jane Szmanda Zeller, “Grandparents are avid benefactors when it comes to life insurance. In the case of cash value life insurance, it’s a gift that keeps on giving and it locks in valuable coverage at a low cost.”
Whole life insurance can be very affordable when purchased for a younger child or adult. Limited pay policies allow you to pay premiums for only ten or twenty years; during that time, your premium rate is guaranteed and will never go up. Once you complete the payments, the policy is paid in full and will remain in place for a lifetime unless the policy owner decides to cancel it; if this happens, the policy owner can withdraw the cash value.
See the chart here for examples of male and female rates for a $25,000 BetterLife Whole Life policy. Please note: some of the rates included in the chart will be increasing as of January 1, 2022. Be sure to speak to an agent right away to ensure you get the best rate.
Still not sure if whole life is the right choice for your loved one(s)? Here are a few articles that compare whole life insurance with some of our other life insurance options:
- Whole Life Insurance vs. Term: Which Is Right for You?
- How Does Universal Life Compare to Whole Life?
Don’t hesitate to reach out if you have any questions.
How Do I Get Started With Gifting a Life Insurance Policy?
The process for gifting a life insurance policy is simple. BetterLife has agents to help you select a life insurance policy over the phone, through a virtual meeting, or at an in-person appointment. After you select the type of policy and the amount of coverage, you will need to fill out some paperwork. The parent or legal guardian will need to sign the application as well if the person being insured is under eighteen, and if the person being insured is over seventeen, they will have to sign the application as well. Often times, when a child is being insured, the parent will also have to participate in a telephone interview and answer health questions about the child.
After the application goes through underwriting and is approved, the life insurance policy is in place and the insured person has full access to BetterLife’s Member Benefits.
Ready to talk to an agent about gifting a life insurance policy? Here’s how YOU can get started:
*According to current tax laws, IRC Sections 101 & 7702. **Policy loans provide access to your cash value. Loans and unpaid loan interest reduce the death benefit. If a loan exceeds the surrender value of the policy, the policy will terminate. Guarantees are backed by the financial strength and claims-paying ability of BetterLife.