Gifting with life insurance
Insure
Life insurance as a gift? Absolutely! Life insurance is fast becoming the go-to solution for those who want to give—or receive—a gift with 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. The following are some ways that life insurance is being given:
As a wedding gift
A newlywed couple may be knee deep in linens, glassware and appliances, but do they have financial security in place should something happen to one of them? A gift of life insurance for the couple instills a sense of responsibility, with the security of knowing that they are protected financially. In addition, life insurance is very affordable for young people.
As a way to say “thank you”
Are there people in your life who are special or to whom you owe a debt of gratitude? If you’re wondering how you might thank them, considering taking out a life insurance policy and listing family, friends and other special people as beneficiaries. You can list as many people as you like, and designate what amount of the payout you’d like each to receive.
As a boost to your favorite non-profit
Perhaps you’ve been involved with a non-profit or charity that you would like to be able to help. What could be better than naming the organization as a beneficiary of your life insurance? The payout will not only be memorable, but is tax-free as well.
As something for the kids or grandkids
Life insurance is a great way to pass money down to the younger generation. When you make your heirs the beneficiaries of a life insurance policy, the benefit is usually tax free and paid out immediately. This is a great way to help pay for education or help get them off to a good start.
While life insurance is a great gift, there is some planning involved. You will need to follow up on a regular basis to make sure you still want to include the beneficiaries listed. Make sure that the insurance company knows how to contact the beneficiaries. When you list minors as beneficiaries, there are some legal steps to consider. Most important, be sure to tell someone that you have a policy so if something happens to you the policy will be paid out.
Unless otherwise indicated, this article was written by John Hancock, and is intended to promote awareness and is for educational purposes, only.
Life insurance death benefit proceeds are generally excludable from the beneficiary’s gross income for income tax purposes. There are few exceptions such as when a life insurance policy has been transferred for valuable consideration. Comments on taxation are based on John Hancock’s understanding of current tax law, which is subject to change. No legal, tax or accounting advice can be given by John Hancock, its agents, employees or registered representatives. Prospective purchasers should consult their professional tax advisor for details.
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