The Power of Policies for Young People

Frank is 45 years-old, married with two children and one on the way.

Mary is 40 years-old, married with no kids but she loves her husband, dogs, nieces, and nephews.

Steve is 12 years-old and enjoys soccer and video games.

Mark is 19 years-old and plans to study engineering at (the) Ohio State University.

Phil is 28 years-old, engaged, owns a small business with 10 employees.
(not actual names but some real cases I've dealt with over the past few years)

What do they all have in common?  They are all un-insurable, they cannot purchase a typical* life insurance policy.  They cannot protect their current or future families or businesses from financial hardship should something happen to them.

What else do they have in common?  The conditions which caused them to become un-insurable were diagnosed when they were between 5 and 8 years-old.  Which means for a brief window of time in their young lives, they were insurable.

Most folks aren't comfortable talking about life insurance for children.  It conjures up morbid thoughts of horrible loss.  As a father of 8, I understand that and have no intention of even addressing that in this post.  However, my job is to get them (you and me) to think beyond the immediate.  My job is to help us "see" into the future, what may or may not happen, and plan accordingly.

When you look into the future for your children and grandchildren you see what I see.  You see them growing up, maturing, becoming adults, starting families, pursuing life, living it to the fullest, and keeping the beauty of life and family alive for the next generation.  I see this for my own children.  Yet I also see my grandchildren and I want to protect them.  Yes, that's what life insurance on young people does.  The policies I purchase on the lives of my children aren't for them!  They are for my grandchildren.

Let me explain.  When I purchase a policy on each of my children I lock in their insurability as it is right at this very moment.  It's locked in, they will always be able to get life insurance as though they are as healthy as they are today.  So no matter what happens to them in the future health-wise, with the policies I have in place, they will always be able to purchase life insurance.  So, if anything ever happens to them, now or 50 years in the future, if they were to pass away, their families are protected, my future sons and daughters in-law, my future grandchildren won't suffer financially.  That's the power of policies for young people!  It can protect not just individuals from financial loss but generations!

The key is getting it early.  All of those people mentioned above were insurable at one point.  Had someone talked to their parents or grandparents about life insurance for them while they were young, their families, businesses, employees and the like would not be at risk today.  I don't blame parents or grandparents.  I blame agents like myself.  We need to do a better job of showing people this need and the power of these policies.  If parents and grandparents chose to pass, then it's on them.

Of course, the final question is always....yes, but what does this cost?

There are policies of $10,000 for $25 per year.  These same policies can then be converted to a permanent policy for up to $25,000 with no questions asked.  It's a pretty good deal but even $25,000 isn't going to protect my grandchildren much.

Here's another idea:  $100,000 term policy with $50,000 GPO's (Guaranteed Purchase Options - allow the insured to purchase increments of $50,000 of insurance at certain points in their life with no medical underwriting for an additional total, if each option is exercised, of $350,000).  So basically you are locking in your child or grandchild's insurability to the tune of $450,000 for about $17 per month. Of course with the exercise of each GPO premiums increase but that's a lot of insurance for about $0.50 per day.  This strategy may not be for everyone but it's certainly worth looking into if a family has medical condition that runs from generation to generation.

Another approach is a permanent policy, again with GPOs.  The nice thing about permanent policies for children is locking in a low premium.  With the above policy, the premiums on the base $100,000 will begin to increase at age 46.  However, with a permanent policy, the premiums on the original policy will always stay the same for life.  In fact, you may even condense payments into 10 or 20 years or even a one time lump sum.  This creates a paid-up policy that continues to grow in cash value and death benefit.

There are plenty of different strategies depending on individual family goals, finances, and often times family health history.  The best approach is to speak with a trusted insurance professional.  He or she can advise you on the right approach for your child or grandchild.  The key is to take care of it early.  Give them the gift of insurability.  You'll be protecting generations.  That's the power of policies for young people!

*Guaranteed Life Insurance policies are available to people who are not able to purchase policies because of medical conditions.  These policies are much more expensive and often limited in coverage amounts.  However, something is always better than nothing.