Ask Terry Questions life insurance for two teens

life insurance for two teens

By Terry Savage on January 14, 2019 | Insurance & Annuities

Want to purchase life insurance policy for two grandchildren ages 15 and 20. Please suggest a good insurance company to go with. Thank you.

Terry Says

WAIT!! Why do you want to buy an insurance policy on the lives of two young children? Who would be the beneficiary if they die? What would the beneficiary do with the money?? If you’re just trying to make the money grow tax-deferred, there are better choices!

If you’re trying to build an investment account for them, you can contribute to a 529 college savings plan — though it is a bit late to consider that. Or when they get jobs, gift them money to open a ROTH IRA — money that will grow tax-deferred for a long time. They can each contribute up to $5,000 if they earn that much money from paid work. And the contribution can come from your gift.

Money gifted to them now will weigh heavily against the family in the college financial aid formulas, or I would suggest opening a mutual fund account for each of them. But if they are not going to college –or if their parents will be able to pay for college, then consider that route.

And back to the insurance idea, it doesn’t make sense from an insurance perspective either. They don’t need a policy on their own lives until they have someone depending on them — a spouse or children. And at that point if they can’t qualify for their own policy, they probably won’t have either. I am not in favor of this idea of life insurance for children, as you can probably tell!

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