The Gift That Keeps on Giving: Life Insurance for Young Couples and Individuals
Ever thought about slipping life insurance into your gift list for weddings or baby showers? It might not be the flashiest present, but it's a savvy move to safeguard your loved ones' financial future.
Meet Duane Bolinger, a financial whiz from Eldon Reese Advisory Group here in scenic Portland, Oregon. He recently dropped some golden nuggets of wisdom during one of our workshops, focusing on how families can brace themselves financially for the unexpected loss of a parent or spouse. The star of his show? You guessed it, life insurance. And he had a genius idea that we're eager to share.
When his kids each hit the milestone age of 18, Duane and his partner snagged them a sweet $100,000, 20-year term life insurance policy. Now, you might be scratching your head, wondering why they'd do that when their kids were miles away from tying the knot or starting a family. Two words: lowest premiums.
Term life insurance is like a game for the insurance companies. The lower the odds that someone will meet their maker during the policy's term, the less they'll charge in premiums. And since sprightly 18-year-olds are likely to outlive a 20-year policy, Duane's kids scored rock-bottom rates—$15 a month or $180 a year per child.
But here's where it gets even more interesting: Duane and co. weren't just pinching pennies. They were also "insuring their insurability," a catchy phrase shared with us by Austin Bowden, a Farmers Insurance agent from sunny Rocklin, California. In plain English, this means they were safeguarding against a time when their kids might become high-risk or uninsurable. Health history, job choices (imagine truck drivers and steel beam balancers), and daredevil hobbies (like skydiving or rock climbing) can all throw a wrench into your insurability status.
In case you're wondering, Duane and his partner took care of the premiums and beneficiary decisions. But here's the twist: their offspring can take over the payments whenever they fancy and even change the beneficiary to someone else they have in mind.
Duane's early bird approach to life insurance might be a tad unconventional, but there are more typical moments when parents gift life insurance—think weddings. Makes sense, right? It's a time in an adult's life when they start depending on someone else, both financially and emotionally. And let's not forget when the grandkids start coming; a little backup policy from grandma and grandpa can offer peace of mind all around.
And when you reveal your gift, please please please emphasize that this should be a backup policy. The young couple should still acquire their own policy for up to ten times their annual income.
And here's the kicker: You can't just surprise someone with a life insurance policy. You need their green light, and the insurance company will probably want some juicy health info and other details that only the future policyholder can spill. So, do yourself a favor—reach out to a life insurance agent, have a friendly chat about the idea, and figure out what's needed. And as always, don't put all your eggs in one basket—talk to a few different agents and companies to find your perfect match.
Now, here's your action item: If you've got children or grandchildren entering adulthood, have a heart-to-heart about the world of life insurance. And consider gifting them a small policy to kickstart their financial safety net. And if you're a parent with kiddos running around and no life insurance of your own, it's high time to give an agent a ring and explore your options. Life can be unpredictable, so why not make sure you've got a solid plan in place?
All the best,
Corey
P.S. Need some help knowing how much life insurance a couple might need? Download our free Survivor Financial Plan Budget.
