What do we mean by “love gifting a life policy”? Well, it’s when for example grandparents buy a life policy for grandchildren. This type of gifting benefits everyone involved. There are many reasons for giving children a Whole Life Juvenile Policy. You will preserve their insurability, transfers wealth and teach them long term financial planning. You will also give them a head start to life by saving money for their education and so on. Let’s now take a look at 3 reasons you’ll love gifting a life policy.
3. Gifting With No Taxes Attached
If you give a gift within your family, there are tax limits on how much you can give before such transfer of money becomes subject to gift tax. Since children cannot be owners of a life policy, then the giver remains the policy holder until insured child turns 18. If you give a life policy say at birth, then you have 18 years to fund this policy. After 18 years of saving there is quite a bit of money in the policy. At this point the insured transfers the policy to himself and is considered to be an exception to the gift tax.
2. Proper Financial Education Through Gifting a Life Policy
One of the mistakes made when bringing up the Millennial Generation was the lack of proper financial education. Meaning kids were spoiled by being given everything by their busy parents, who made good money. Young adults now run into problems saving money. Currently, the lack of savings is one of the major problems in the US. Teaching kids to save money practically right from birth sets them on the right track and teaches them proper habits. Once they turn 18 and see the money, they’ll understand money management concepts a lot better. They will not be susceptible to overspending as much.
Education is always the key. Many financial experts will say that it is never too early to start teaching kids proper money management skills. This is a big reason to start to love gifting a life policy.
1. Legacy – The Time Capsule Effect
Besides the practical aspects of gifting a life policy, there is the sentimental, love part. When you purchase a policy for a grandchild at birth, there is a chance you may not be around when they are ready to take over this policy. By including a personal letter to them, just imagine how they will feel upon reading it. You’ll be leaving a legacy of love and understanding. They will know how much they meant to you. You are leaving them a legacy and an estate they can always rely on. This is without a doubt the number one reason you’ll love gifting a life policy.
Do You Love Gifting a Life Policy Yet?
We hope our reasons convinced you to love gifting a life policy. In the next step we need to get together and define the basic parameters. Optimizing a Whole Life Policy is crucial and can’t be done by just filling out an online application. There are also several other legal conditions that must be met. For example the person buying the insurance must also have an active life policy. Another important rule that must be observed is not to over fund the policy early. If a policy is over funded, then it becomes an MEC (Modified Endowment Contract) and different conditions would apply. This is why a personal meeting is required.
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