Buying Life Insurance for the Grandkids
September 14, 2022 | Tom Peterson
As you age, it may be important to leave a piece of life’s greatness to your future generations. That can mean sharing an heirloom that has been passed down from prior generations, contributing financially towards an education, or leaving a life insurance policy with an inheritance to be used at the beneficiary’s discretion. Learn more about buying life insurance for the grandkids here.
What You Need to Know When Buying Life Insurance for the Grandkids
When choosing a life insurance policy, you have options. But did you know that you also have choices when assigning a beneficiary? Here we will introduce some ways life insurance can contribute to your goal of leaving a legacy.
Beneficiary
Choosing to list a grandchild or grandchildren as a primary or secondary beneficiary can be one way of ensuring they receive these funds in the event of your passing. If you have multiple grandkids, you can choose how this money will be distributed and to whom. Beneficiary information can be changed as needed, as your family grows, or if the need changes.
Continue reading to learn more about assigning beneficiary responsibilities to a person considered under the legal age of adulthood.
Trust
If you have a grandchild that is not legally an adult, setting up their beneficiary responsibilities can look different. Setting up a trust in their name may be needed. By doing this, you can eliminate the probate process before policy funds are distributed.
Setting up a trust can help ensure that the full death benefit is received. You can also establish the age funds become accessible, allowing your beneficiary to gain the responsibility for the amount given.
If your beneficiaries are under the age of 18, you will want to speak with a financial planner to set up this process correctly.
Ownership Change
Another way of assuring your loved one has access to the funds you wish to leave is to reassign the ownership of a permanent life insurance policy. You can do this at any point, as long as the owner is of legal adult age. Or you could have the designated person listed on the policy as the contingent owner, which will automatically assign them as owner in the event of your passing. This will allow for the use of the cash value that has accrued – although a new beneficiary will need to be named for the death benefit.
Life insurance can be beneficial in many ways and can guarantee an inheritance for a loved one. Contact the experienced agents at Twin City Underwriters to discuss your life insurance goals.
Choosing a life insurance plan can be difficult. Working with an insurance broker can help you find a plan that fits your needs. Schedule a one-on-one meeting with one of our life insurance brokers to get your insurance questions answered!