Life Insurance for Grandchildren

smiling grandmother hugs her granddaughter on the couch and reflects about life insurance for children

Key Takeaways

  • Life insurance for grandchildren provides lifelong coverage, protecting them from potential health issues and ensuring coverage for life.
  • Purchasing a policy early allows for lower rates, ensuring the best possible premium costs.
  • Some life insurance policies offer cash value that can be utilized for various financial needs, such as a down payment on a home or college tuition costs.
  • In the event of a tragedy, a life insurance policy can serve as a financial cushion, providing support for grieving parents and helping them manage unexpected expenses.

As a grandparent, you want to provide the very best in life for your loved ones. You also want to help protect them against the uncertainties of life. You may not realize that purchasing life insurance for grandchildren could be a valuable gift — a gift that offers lifelong protection.

It used to be that life insurance for children or grandchildren was thought of solely as a financial safeguard against the unthinkable. However, it could also provide guaranteed insurability, living benefits and more.

Lifelong Coverage

You hope your child or grandchild will live a healthy life without any serious health conditions. Unfortunately, there's no guarantee against illness or disease. As children age, health issues like cancer or asthma might make coverage difficult to acquire. However, an early purchase of a policy for a child could provide coverage for life, as long as the premiums are paid.

A pre-existing condition could prevent an adult or child from obtaining life insurance. This is an unfortunate fact of life, but preparing for the unexpected could help you protect your child or grandchild.

Some life insurance policies allow you to add an option that extends life insurance benefits to children throughout their lives. Some policies even offer an optional guaranteed insurability rider, which could allow them to buy additional insurance at a later date regardless of any health issues. It could be helpful to thoroughly understand the details of the life insurance policy. For example, some insurance riders set a maximum age at which adults could claim the benefits.

Lower Rates

Life insurance policies tend to be more expensive for older applicants — and purchasing a policy early in a child's life could help you get the lowest possible rate. Some policies even lock in the rate for the lifetime of the policy, as long as the premiums are paid.

Your grandson may not fully appreciate the value of a life insurance policy at age 9, but he may change his tune as an adult with a locked in rate.

Cash Value

A policy's cash value could be a future financial lifeline. Cash value could also be used for a down payment on a home, college tuition costs and more. However, it is important to note that withdrawing money from the policy decreases the death benefit and cash value.

Some life insurance policies, such as whole life and universal life, allow the holder to withdraw or borrow against the cash value, which is money that grows tax-deferred as long as the premiums are paid.

Final Expenses

Losing a child or grandchild is an incredible tragedy. A life insurance policy, however, could provide grieving parents with a financial cushion that could allow them to take unpaid time off from work and manage unexpected expenses for necessities, such as child care for other children. Life insurance could provide a financial safeguard that could allow parents and family to move forward at their own pace.

The Bottom Line

Life insurance could help you protect your grandchild against the uncertainties of life. A policy can grow with them as they age and provide lifelong protection. As grandparents, you want to give your child the very best in life. No one knows what the future holds, but a life insurance policy could help provide peace of mind today.

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Live More & Worry Less

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