Why Care Value for Juvenile?

Advisors and Agents can Grandparents take out life insurance on a Grandchild?
Selling life insurance for a child provides more than just a financial security net to help pay funeral expenses if the unthinkable happens to that child. Most juvenile life insurance plans offer a non-cancellation clause and the ability to borrow against the cash value of the plan. Grandparents, can give those gifts to their grandchild by taking out a life insurance policy on them.

The Rules

Grandparents are often considered extended caregivers of children, so they usually have the right to purchase life insurance in the grandchild’s name. These policies are typically small, such as $10,000, and designed only to cover funeral expenses if the child dies as a minor. Some states require the child’s parents to sign off on the policy, but most states allow grandparents to purchase the life insurance without the parents’ permission or knowledge. Typically, the grandparents need basic information on the grandchild, such as address and Social Security number.

Lifelong Insurance

One of the benefits of Selling a juvenile life insurance policy to your Senior clients is that you can give their grandchild the ability to be insured as an adult. Most juvenile policies guarantee adult coverage as long as the premium is paid, regardless of their grandchild’s health. If their grandchild develops a chronic or terminal disease, he is unlikely to be able to buy his own life insurance at that point. However, if he has continued to pay for the insurance your Senior client has purchased for them as a child, they won’t lose his coverage. Some policies double when the child turns 18 with no premium increase, while others offer a higher amount for an additional fee. Some let you pay a lump sum when their grandchild is a minor, they pay no further premiums until they become an adult, at which time they can opt to begin paying a monthly premium for the guaranteed coverage.

Cash Value

Many juvenile life insurance plans build cash value over time, meaning your Senior Client — or their grandchild, when an adult — can borrow or withdraw from the cash value. They can use this money to help prepare for his future, such as paying for education or perhaps as part of a down payment on a first house.

Beneficiaries and Ownership

Your Senior Clients don’t have to name themselves as the beneficiary of their grandchild’s life insurance policy. Many grandparents name the child’s parents instead, as they are the ones who would need the money to pay for expenses if something happened to the child. You as the insurance professional can also suggest to name another family member, such as a sibling. However, they still own the policy while their grandchild is a minor, regardless of who is named as a beneficiary. When the child turns 21, they must either turn ownership over to the insured or lose the insurance — most policies don’t let grandparents continue to pay once the child becomes an adult, although there are exceptions. Also, if your Senior client dies before the grandchild turns 21, his parents have the option to continue the insurance in their names instead of the grandparents in most circumstances.

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