THE BABY GIFT THAT KEEPS ON GIVING: LIFE INSURANCE
How to protect your child – now, and in the future.
Family and friends routinely flood newborns with welcome presents – from booties and blankets to bouncy seats and baby dolls. But there's one gift that can top them all:
Any parent, grandparent or legal guardian can purchase a juvenile life insurance contract if they have an insurable interest in a child. This can mean a blood relationship or financial dependency, or a situation in which the beneficiary would suffer an economic loss if that child passed away.
But these types of policies aren't just for newborns. Even if your children are older, gifting life insurance can have a wealth of additional benefits.
The benefits of
Medical conditions, chronic illnesses or disabilities can make life insurance more costly – or even impossible – for children to get when they become adults. But buying a life insurance contract for a qualifying child means he or she will always be covered as long as the premiums are paid.
You also can add a guaranteed purchase option to a child's life insurance contract. Doing so allows the child to purchase more insurance later – up to nine times between the ages of 16 or 18 and 43 – without providing evidence of insurability. So if he or she becomes uninsurable due to an illness or accident, there's still the option to increase the value of life insurance.
Buying a life insurance contract for a qualifying child means he or she will always be covered as long as the premiums are paid.
Paying monthly premiums is also a simple method for saving money and building up cash value. That way, as the child gets older, he or she can borrow from the policy to help pay for anything – from college tuition to a wedding or a down payment on a house.
You may also be able to borrow1 from a life insurance contract's cash value without a credit check or paying taxes.2 You'll only pay income taxes on gains if you choose to surrender cash value from the contract instead of borrow it. And if the contract is a modified endowment contract, the loan and interest are taxable.
In some cases, the contract can also help cover disability payments. Adding a waiver of premium rider to a child's life insurance policy can help ensure the payments will be paid for if he or she becomes disabled as an adult and can't pay premiums.3 (There may be an additional cost for this rider.)
As with other types of life insurance policies, this contract also offers a death benefit. No family ever wants to fathom losing a child. But if that happens, a death benefit can help cover expenses for loved ones to take time away from work or receive support and counseling. Often, families will also make a charitable contribution or establish a foundation, scholarship or memorial to honor the child – all of which can help family and friends grieve.
A Thrivent Financial professional can work with you to help you understand the fundamentals of juvenile life insurance, along with how it can fit into a larger financial plan.
No matter what stage of your Wise With Money Journey you're in, we can help you explore a wide range of financial products and services to help you reach your goals.
With our fee-based Financial Planning Services, you'll work with a Thrivent Financial professional who can provide ongoing, objective advice and help you create a holistic, personalized plan.
Disability income insurance can help you continue to pay bills and other expenses if you're unable to work for an extended period of time.
MORE TO EXPLORE
Your insurance strategy can help provide protection and flexibility for you and your family. In particular, cash value life insurance can provide a range of options. And getting cash out of your life insurance may be easier than you think.
Change is inevitable. When it happens, life's big events – the celebrations and the disappointments – may be ideal times to consider if the life insurance you have is what you want. And what you need.
You can't necessarily call unexpected expenses "unexpected." They arise for all of us. If you're not prepared for such pitfalls, they can quickly derail your financial life. Having an emergency fund in place can provide valuable protection.
1 Loans and surrenders will decrease the death proceeds and the cash surrender value available to pay insurance costs. Surrenders may generate an income tax liability and may be subject to a decrease charge. A significant taxable event can occur if a contract terminates with outstanding debt. Contact your tax advisor for further details. Loans and surrenders may cause a contract to lapse or terminate without value. Loaned values may accumulate at a lower rate than unloaned values. Contractual charges may apply.
2 The federal income tax treatment of life insurance is unclear in certain circumstances. A qualified tax advisor should always be consulted with regard to the application of law to individual circumstances. Thrivent Financial does not make any guarantee regarding tax treatment (federal, state or local) of any contract or of any transaction involving a contract, particularly after insured age 100. Life insurance proceeds may be subject to federal and/or state estate and/or inheritance taxes.
3 Not all riders are available in all states. Limitations and exclusions may apply. This contract has exclusions, limitations, reductions of benefits and terms under which the contract may be continued in force or discontinued. For costs and complete details of coverage, contact your licensed insurance agent/producer.
If requested, a licensed insurance agent/producer may contact you, and financial solutions, including insurance, may be solicited.
THRIVENT IS THE MARKETING NAME FOR THRIVENT FINANCIAL FOR LUTHERANS. Insurance products issued by Thrivent Financial for Lutherans. Not available in all states. Licensed agent/producer of Thrivent. .