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How to Secure Your Children’s and Grandchildren’s Future Using Life Insurance & Annuities


Why Buy Life Insurance For Kids?

Life insurance for children is just as beneficial as buying a life insurance policy for you or your spouse. One of the main reasons we recommend life insurance for children is because buying life insurance for kids guarantees their future insurability. If they develop a serious medical condition (or even a non-life threatening condition, such as autism, juvenile diabetes, or substance addiction), they could be charged higher premiums or even denied coverage as they become adults and need to protect their own families. Getting them into a life insurance policy while they’re young guarantees long term coverage and locks the premium payments as well.

As a side note, life insurance will cover funeral costs and give you time to grieve without having to worry about rushing back to work. Life can be overwhelming in a time of crisis, and having peace of mind and financial support goes a long way.

Purchasing an annuity for your child or grandchild is also an excellent way to boost their retirement savings early. With an annuity, you make an initial deposit and then contribute any amount each year. For example, if you were to open an annuity on a three-year-old with a $2,000 deposit and contribute $1,000 each year for 23 years, the annuity would be worth at least $165,000* when the child turns 65. Yes, that’s right, in this example you would invest $25,000 and your child or grandchild will have $165,000 at age 65.

*based on current interest rates and age of annuitant at time of purchase


Life Insurance For Children

At its most basic level, life insurance for a child works much the same as life insurance for an adult. In most cases, life insurance for children is Universal or Whole Life. However, Term policies for children are available with some carriers.

Universal and Whole life insurance normally lasts until a specified age; however, the policies can be customized to meet individual needs and budgets. They also can build cash value over time that your child can borrow from in the future, offering much flexibility as life changes.

Both of these products offer limited pay structures, making them excellent for gifting to children and grandchildren because you can make a limited number of premium payments and receive a lifetime of coverage.

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How Does Children’s Life Insurance Work?

The first major difference is that the parents or grandparents are the policy owners rather than the child themself. This allows you to make important decisions about your coverage (and pay the premiums) during the time your child is a minor. Once the child becomes an adult, they can take over as policy owner.

This allows your kids and grandkids to buy into an incredibly affordable policy that will last the child’s whole life without having to submit to a medical exam.

Another benefit is that—depending on your policy—coverage may automatically increase when your child reaches certain ages. For example, with Guaranteed Purchase Option Riders, the insured can purchase additional life insurance at designated ages without proof of insurability.

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Life insurance is one of the only policies that is beneficial to everyone, regardless of your age or assets. If you want to set your child or grandchild up with lifelong coverage, buying a policy now is the best way to accomplish this.

However, this is not a policy that can be purchased and put away. Like all policies, your life insurance coverage should be reviewed on a regular basis to make sure that you have the correct level of protection for you. This is also a good time to review your beneficiaries.

At Darr Schackow Insurance, our agents focus on connecting families like yours with the policies that best fit their lifestyles, risk profile, and budget. Contact our Life Specialist today for your free financial review and see how our products can meet your needs.



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