The best time to buy life insurance is when you’re young and healthy because the cost of your insurance will never be lower. However, young people don’t often have the money to buy life insurance – cue the perfect holiday gift for that impossible person on your list!

Here are five reasons why the gift of Life Insurance will make the perfect holiday gift:

  1. It can lock in their insurability, hedging against unforeseen health issues that might prevent them from getting life insurance later in life.
  2. It starts building cash value early on, and starting younger gives the money that much more time to compound. This larger cash value might come in handy when it comes time for your recipient to buy that first house, put kids through college, or even retire.
  3. It locks in lower premiums. It’s much cheaper to buy life insurance when you’re young and healthy. Covering those first few years of premiums for someone allows them take advantage of these lower premiums.
  4. It instills a sense of responsibility, which is why life insurance makes a tremendous gift, as it can help prepare someone for big steps in life – a mortgage, a spouse, or children. Yet studies show that up to 23 percent of families with children under 18 have no life insurance. Even for those that have insurance, there is a concern that they might not have enough.
  5. It provides a death benefit. In an era when students are graduating with an average of $26,000 of student debt, to say nothing of credit card debts and rental agreements on apartments, young people may have a surprisingly large amount of final expenses.

Of course, buying life insurance is a major decision and there are several things that must be considered:

  • How much insurance to buy. The amount is something that really depends on the facts and circumstances around the gift. Maybe start with $100,000 or so, which provides a good foundation of immediate protection, but it leaves room for the insured to add more protection as income, assets, and responsibilities grow.
  • Long-term affordability. Unless the premiums are going to be gifted in perpetuity, at some point the recipient is going to have to take over the responsibility of paying the premiums, and they need to be able to have the means to assume that responsibility.
  • Who owns the insurance? Ultimately, the recipient should own the policy, but many times the policy starts off being owned by the person who gives it, who later transfers it over to the insured.
  • The tax implications of the gift. It is considered a gift when the ownership of a life insurance policy gets transferred to the insured. If the policy is owned by the insured and the premium is being paid by someone else (the parent for example), it is considered a gift too. The amount of the gift depends upon the value of the policy when it is transferred. Gift taxes may be avoided if the amount is under the annual gift limit or it does not exceed the person’s lifetime gifting amount. Consult your tax advisor for details.

Life Insurance could be the perfect gift that provides real staying power. As consumers switch from buying things to buying experiences, and as a desire for financial security becomes a goal, more and more people are opting for gifts that can create a sound foundation and stability. Contact CoverLink Insurance today and we can help you get started.