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Why I Buy Life Insurance for My Grandkids (The Gift of Peace of Mind)

Life Insurance for Grandpchildren

The other day I was chatting with some of my co-workers about ideas for articles about life insurance. 

Our agency is committed to educating our clients about all kinds of insurance products. With September being National Life Insurance Awareness month, we naturally talked about articles that could help our clients better understand life insurance.

That’s when Tammy shared with me about a client who routinely purchases life insurance policies for her newborn grandbabies. I’ve heard of all kinds of gifts for babies, but life insurance was never one of them.

Tammy had me intrigued. So I asked her if I could talk directly with her client about why she buys such an unusual gift for her grandkids. And she introduced me to Linda Beabout.

Why buy life insurance for your grandkids?

Mrs. Beabout, a long-time Greene County resident, is the mother of three and grandmother of six sweet grandbabies! And Linda makes it a priority to get each new grandbaby a life insurance policy in their first year of life.

“Why,” I asked her, “did you decide to buy your grandchildren life insurance?”

Linda said her reasoning was two-fold. First of all, she wanted the peace of mind that comes with knowing your family will be financially protected if the unthinkable happens. 

Second, Linda noted that she sees life insurance as an investment for both her kids and grandkids.

Knowing your loved ones are financially protected

We began to unpack Linda’s first reason for buying life insurance for a baby. “Knowing that it’s unlikely that anything tragic will happen to my grandkids,” Linda commented, “I wanted to know that if it did, their financial needs would be provided.”

The death of a child is unimaginable for a parent. The unbearable grief that a parent feels when they lose their loved one is indescribable.

When you lose a child, many painful decisions have to be made. And if a family does not have the financial resources for funeral and burial costs, those decisions can be exasperated. 

Linda wanted to know that wouldn’t be the case for her family. She wanted the peace of mind that finances would not be an added burden to her children. — that the resources would be there in the case of a tragedy.

Investing in her grandchildren’s future

As I said, Linda noted that “probably nothing will happen to my grandkids, but they will end up having this policy to spend how they want.”

Linda purchases a 10-pay whole life insurance policy for each of her grandchildren. That means, in ten years, those policies will be paid off. At that point, the policies will have cash value for her grandchildren.

What is a 10-pay whole life insurance policy?

Life insurance comes in lots of shapes and sizes, which can make this product a little tricky. So what exactly is a 10-pay whole life insurance policy. 

A 10-pay whole life insurance simply means that Linda will make ten payments – one payment each year for ten years.

Whole life means that the policy will be in place for her grandchildren for the entirety of their lives.

What happens after you make all ten payments and the policy is “paid-up?”

In the insurance world, we say that a 10-pay life policy is “paid-up” after you make your final payment. At this point, the policy will have a cash value.

Because this kind of policy has cash value, Linda’s grandkids can use the interest off of their policy or cash it in if they want to as they get older. Some individuals with this kind of policy have used it to help them buy books for college, put a down payment on a home, or use the money for some other major purchase when they are an adult.

How much does it cost Linda to make this kind of investment for her grandchildren?

People usually think that life insurance is more expensive than they can afford. But, after pricing it out, they’re surprised when they find it more affordable than they imagined.

When I asked Linda about the cost of her policies, she told me they cost anywhere from $240 to $300 a year. And she already has two of those policies paid in full.

What are the most significant benefits of buying life insurance for a grandchild?

Yes, life insurance is an unusual gift for an infant, but the more I thought about it, the more I realized just how many benefits there are to buying this kind of policy for a little one. 

#1 Life insurance for a child is inexpensive.

When you’re very young, the premium for a life insurance policy is substantially less than when you get older. The best rates you’ll ever get are when you’re an infant.

#2 Most young adults don’t think about buying life insurance.

When you’re in your late teens or twenties, you feel invincible. Life insurance is usually the last thing on your mind. But as we age, life insurance becomes more expensive. And if we develop a medical condition, life insurance may not even be an option. These are things we usually don’t think about before they happen!

#3 Your grandchild can cash in the policy when they are older if they need it.

We never know what we’ll encounter in our adult lives. We could face unemployment, medical bills, school loans, etc. A “paid-up” whole life policy can provide that extra financial support a grandchild might need when they are older.

#4 You won’t have to worry about financial strain on a young family if their child passes away.

While difficult to think about, incurring huge funeral and burial bills adds even more pain to a young family. Knowing your loved ones won’t suffer financially brings added peace of mind. 

Want to know what it would cost to buy a life insurance policy for your child or grandchild?

Does Linda’s unique gift have you intrigued? If so, you may be wondering how you can learn more about buying a life insurance policy for your child or grandchild.

Our personal insurance team helps families get life insurance coverage in place every day. They have the expertise to guide our clients through the buying process – from determining what type of policy will best meet their goals to finding the company that will provide them the best coverage at the best price.

If you’d like to find out what it would cost to insure your child or grandchild, a quick call to one of our agents can get that ball rolling. In as few as ten minutes, you’ll know what it will cost to insure your loved ones. Give us a call today!