Life insurance is a safety net for ensuring that you can avert as much future financial hardships from your loved ones, as possible. There are two main types of life insurance: Term Life and Permanent Life Insurance. Term Life is temporary in nature, but popular in US citizens, for being economical.
Permanent Life insurance is further classified into two types: Whole Life policy for grandchildren and Universal Life Insurance. Both are similar in many aspects but differ in others. It is human nature to protect and revere their family and loved ones.
As long as you’re alive, you’re always struggling and are able to shield them from harsh environments. What shall be your course of action after death? There is only one way to safeguard them, if you can leave enough savings, assets, or insurance, for them. This will enable them to live a life as smooth as it was, during your life.
One of the major sorts of life insurance is the one that grandparents and great-grandparents buy life insurance for their grandchildren. It is a reflex action and basic instinct to unconditionally love your kids, but it is a far more intense protective feeling that one has towards their grandchildren.
How Does Life Insurance For Grandchildren Work?Grandchildren’s life insurance policy is a whole life policy for grandchildren, by nature. It covers them for life, till their death, leveled premiums, and a cash value component come along as a part and parcel of the policy. It is a permanent policy by nature. When grandparents buying life insurance for their grandchildren, there are certain constructs to consider:
- The grandchildren must be aged between 0-17 typically, though Globe Life covers them till the age of 24 years.
- The death benefit payout coverage is usually between $5000-$50,000 for grandchildren’s life insurance.
- The coverage can be used for borrowing loans from cash value for college/school fees, study expenditures, or any medical unforeseen expenses.
Why should you insure your grandchildren?It is quite simple, there are 3 major reasons for which everyone who has the budget, should go for it.
1. Funeral ExpensesAlthough the probability of death lies with increasing age, it is not a rule. Child deaths are occurring every day worldwide, and it is one of the harshest realities, it is inevitable. Life can bring all sorts of ups and downs to you, the general rule is to be prepared. If you care enough, you’d be willing to make sure that your grandchild’s death is followed by his decent funeral ceremony. Typically, for a child or adult, a funeral costs $10,000 for burial costs, casket costs, memorial services, flower charges, obituary costs, etc.
2. Guaranteed to get more CoverageGetting insured at such a young age ranging from 0-24 years enables your grandchildren to become eligible for buying more life insurance policies from any other insurance agency. Since the coverage is $50,000, they would obviously need much more coverage after becoming adults and finally becoming old. They would not have to undergo more underwriting in the future.
3. Savings for their FutureThe most significant reason is to protect them from any financial crisis in the future. Premiums per month go 3 ways: to death benefit, to the cash value, and to the insurer’s operating overhead costs. The cash value component also has interest on it. Within a decade, the cash value holds a considerable amount of cash to cater to their college expenses.
What if you die soon after getting liife insurance for your grandkid, who would pay premiums?Firstly, this type of whole life insurance which you buy for your grandchild does not require you to take permission from their parents. It is irrelevant even if you do not tell their parents, as per the procedure. You as a grandparent are not entitled to tell any guardians either if you do not want to. Secondly, let’s suppose you die after 3 years, and you insure your 7 years old grandchild, now who would pay the premiums after your sudden demise? The grandchildren’s life insurance policy is lenient in nature and cushions the grandparent to hand over the policy to anyone else within a 90 days time period. If the grandfather has expired, now the grandmother can continue the monthly premiums. Similarly, the premiums can be paid by anyone from the family who is willing to take over, further. Eventually, there is no downside to buying life insurance for your grandchildren.
How Much Does Life Insurance for Grandchildren Cost?Since it has a face value of around $50,000 mostly, it charges a monthly premium of $20-$35 only. It does vary with age obviously, for 0-4 years old it starts from $20, and from 15-17 years old it goes up to $35.
How To Know If Your Grandchildren Will Qualify?Every child ranging from 0-17 is eligible if he does not have the following medical conditions:
- Down Syndrome
- Sickle cell anemia
- Spina bifida
- Heart conditions
Best companies for getting Life Insurance for Grandkid
1. Mutual of Omaha
- Lowest cost policy
- Quickest 2 minutes online application process
- 90 days grace period if grandparent dies
- Allows buying later multiple coverage options and add-ons without any costs
- Your grandchild won’t have to undergo health or lifestyle questions after this one time
- Most straightforward policy
2. Globe Life
- It allows your grandchild to get insured from 0-24 years of age instead of the standard 0-17 years.
- It is a fiscally awfully strong firm; it is guaranteed to make large payouts no matter how the economy of the country is. Globe Life can always pay your claims!
- Offers lowest price policies for life insurance of grandchildren, just like Mutual of Omaha.
- You can apply through an Email or via a licensed agent.
3. Gerber Life
- Affordable, pocket friendly.
- Quickly acquired online.
- Its unique selling point is its Grow Up Plan.
- As per the grow-up plan, the coverage for your grandchild doubles once he becomes 18 years old.
- Premiums for Gerber Life are twice costly compared to Globe Life and Mutual of Omaha.