Can I gift someone a life insurance policy?
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Asked January 26, 2012
Not only can you give a gift of life insurance, it may be one of the best gifts you could offer. And if you are buying the policy for a child, they may not appreciate the extent of the gift for years, when they realize that your gift has continued to grow in value since the time the policy was written. But there is still another benefit that many people are not even aware of, and that's the lasting power of a whole or universal life insurance policy.
If you have the financial ability, a life insurance policy can be purchased as a single premium policy, where a lump sum is paid on the policy when it is written, and that amount purchases a calculated face value without any future premiums. This method requires a much larger initial investment, but you will not have to remember to make monthly or annual premiums, and if your financial situation deteriorates in the future, it will not compromise the insurance policy.
Life insurance is perfect gift for weddings, birthdays, and anniversaries because the life policy infers a successful future by virtue of the fact that the cash value will increase over time with the added benefit of being guaranteed source of a loan as the value increases.
Buying a life insurance policy for a child can be especially useful. As long as the premiums are paid or the policy otherwise remains in force, the insurance company cannot cancel the coverage based on developments in the health of the insured person. For example, if the child did not have asthma but later develops it, the change in health will have no effect on the value or cost of the insurance. Additionally, a whole life policy purchased early in life can purchase be used as a way to achieve some other future goal such as buying a first home.
Answered January 26, 2012 by Anonymous