Jun 27
Why buy life insurance for a child or grandchild?
There are several reasons.
First, if permanent insurance (i.e. whole life or universal life) is purchased at a very young age the insurance company will often guarantee the child the right to buy more insurance later in their life at regular intervals without providing any evidence of insurability. In other words, if you buy a little now, you are guaranteeing your child’s right to buy more coverage later without having to submit to an exam and without having to answer any health questions. If the child later becomes ill, or uninsurable, these privileges could be the only means to obtain the coverage needed when the child becomes an adult. Example: One major company offers a rider to certain whole life plans which allows the insured to increase their coverage by purchasing up to $100,000 on each of 9 option dates between the insured’s age 22 and 46, for a total of $900,000 of additional guaranteed future insurability! If waiver of premium is included and the insured is totally disabled on an option date, the options can still be exercised. As long as the total disability continues, the insurance company will pay for the premium on the policies!
If you, or anyone you know, have ever been declined for life insurance or charged a higher “rated” premium as a result of a health condition, you will be able to appreciate the value of the privilege to purchase insurance, at standard rates, without any medical exams, and without having to answer any health questions!
More after the jump..
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March 3rd, 2007 at 12:22 am
Can a grandparent buy life insurance on a child without the parents knowledge? This has just recently happened to me. I was unaware that the grandparents purchased this on my child. My husband and I already have life insurance on each other and our child. This has made me feel uncomfortable.
March 5th, 2007 at 10:12 am
After 20 years in the business, this is the first time I\’ve heard this question. Apparently they can, as they already have. Why are you uncomfortable about it? Most grandparents, when they buy life policies on their children, or grandchildren, view it as a gift of sorts.
October 20th, 2007 at 12:02 pm
What should our next step Be? 20 yr term just expired, Ins. company has changed 3 or 4 times.. The premium has readjusted by $80. We haven\’ authorized., been notified any options my husband turns 46 Monday.
February 5th, 2008 at 10:40 am
my childs grandparent purchased life insurance on my child (18 mos.old) with my or the fathers knowledge and six months later my baby was killed in a lawnmower accident the policy was for 15000.00 and with accidental death it doubled. I would like to know if it is legal to do this without my knowledge she doesn\’t even have insurance on her own son or any of her other grand kids.