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December 2016  Volume 9, Number 12        

Life Insurance as a Gift? It’s Not as Crazy as You Think

During the holidays, it can be difficult to think of just the right gift for everyone on your list. Wouldn’t it be great if you could give a loved one a present that would provide financial security for years to come?

Giving a life insurance policy can provide that peace of mind. In exchange for regular premiums, a life insurance company will make a cash payment to your beneficiaries after you die. Or, if you take out a policy on someone else, they can cash in the policy or leave benefits to their loved ones when they pass on.

Life insurance can’t be purchased for just anyone; the recipient must be someone you have a direct interest in insuring. The recipient can be a relative, business associate or your domestic partner. You can buy a policy for that person or you can make them the beneficiary of a policy you take out on yourself.

There are two types of life insurance you can give — term or permanent.

  • When you purchase term life for yourself, you pay premiums for a certain period. If you pass away after the end of the term, your beneficiary won’t get any benefits. While term might be cheaper than permanent life insurance, it can end up being more expensive in the long run if you have to keep purchasing coverage. Premiums can (and probably will) increase at the end of each term. Unlike permanent (whole life) insurance, it does not build up cash value.
  • Permanent, or whole life, insurance pays your beneficiaries upon your death. Your beneficiaries can cash out the policy or take out a loan if they need the money and the policy is in their name.

You’ll need to know some personal information about your recipient, such as birth date, height, weight, other medical information and possibly a Social Security number.

Life insurance can be the most practical and thoughtful gift you’ve ever given, but it does have a downside: it’s associated with someone dying to get the main benefits. So just in case, it might be a good idea to include a fun gift, too!


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In this issue:

This Just In...

Life Insurance Companies’ Dilemma — To Insure or Not to Insure Marijuana Users

What You Need to Know Before Purchasing Critical Illness Insurance

Coverage for Pre-existing Conditions – When You Can’t Be Denied Health Insurance

Life Insurance as a Gift? It’s Not as Crazy as You Think


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