Originally published June 26, 2019, last updated June 26, 2019

The Ultimate Children's Gift? (Hint: It Isn't an Expensive Toy)

Giving your child or grandchild the new Power Wheels Toy Story 4 Jeep Wrangler may elevate you to best-relative status, but at $300 it also could put a big dent in your wallet.

With the astronomical price of some popular toys and kids’ tendency to outgrow toys, it’s no surprise that some parents and grandparents might wonder what gifts could give more bang for their buck. Some may also wonder what lesson you’re teaching or lasting impression you’re leaving giving a gift that likely ends up at the bottom of a toy box, only to be thrown away in a few years.

Although somewhat unconventional, life insurance can be given as a gift, fulfilling your desire to give something with greater longevity and meaning. Here, we look at how life insurance can be an affordable gift that shows your love and helps you leave a lasting legacy with your children or grandchildren.

Insure a Child

Buying a whole life policy for a child or grandchild can provide money for their future needs — for a down payment on a house, for example. Whole life insurance provides coverage for the insured person’s whole life and includes an investment component. The policy builds cash value that the insured — your child or grandchild, for example — can later use, whether for an emergency or a different financial need. They can take out the money, which would lower the death benefit, or take a loan against it and pay it back, preserving the death benefit.

While whole life insurance is more expensive than term life insurance — which covers you for a period of time such as five, 10 or 20 years — it is affordable and easy to attain when bought early in life, such as childhood.

For example, a whole life policy on a four-year-old requires no underwriting — just a few medical questions need to be answered — and can cost $8 a month, providing a $25,000 benefit. You can pay the premium monthly, semi-monthly or annually. That would be less than $100 a year.   

Insure Yourself, Listing Child as Beneficiary

Term life generally has a higher face amount, or death benefit. If you would like to leave your children or grandchildren money after you die, buying a term life policy on yourself and listing them as beneficiaries is one possible path. Beneficiaries don’t have to pay taxes on the benefit they receive, unless the proceeds become part of your estate and the estate is large enough to be taxable.

For some people, this can be an affordable option. For example, a 55-year-old female in better-than-average health would pay about $130 a month for a term life insurance policy of 30 years with a face value of $250,000.

What Do You Want Your Life Insurance to Do?

These are just two of the most common ways you can give the gift of life insurance to children or grandchildren. There are many options, and people buy life insurance for many different reasons — often, it’s to protect the ones you love from financial burden when you die and to show your love. In any case, the main question to ask is, “What do I want my life insurance to do?”

A Licensed Insurance Agent can help you navigate the options to find the right type of insurance for the type of gift you would like to give, and within your budget. In the past, insurance agents would come to your home, but today you can buy insurance from the comfort of your own home, thanks to the internet and companies like Mature Health Center’s partners at Life Insurance Marketplace^®.

Life Insurance Marketplace is a team of Licensed Insurance Agents dedicated to helping educate people with their life insurance options and finding the right product for their needs. You can get a quote online at LifeInsuranceMarketplace.com or call 1.877.888.9985 to speak with a Licensed Insurance Agent.