Everyone likes to think of Christmas gifts as special, whether they come from a retail store, an artist, a custom designer or some other unique source. Usually the more unique a present is, the bigger the surprise. So what about giving a loved one
life insurance as a Christmas gift? Here are details to consider if this idea is on your holiday shopping list.
Life Insurance as a Surprise Gift
The concept of offering someone a
life insurance Christmas gift would be considered unconventional by anyone, since it's not part of the typical holiday conversation. If you were to survey a random sample of the nation's population about what's on their Christmas wish list, odds are life insurance wouldn't make too many lists. But wouldn't that make it extra special since it's one of the most practical, valuable and enduring ways to show you care for someone else?
Even though
life insurance isn't technically considered an asset, it still provides value for survivors after an insured policyholder passes away. It allows a spouse or children of the policyholder to receive a tax-free lump sum of money to pay for living expenses, college tuition, a mortgage or keeping a family business operating. The money can be used for countless other financial needs.
Consider the Application Process
While it's certainly fine to give
life insurance as a Christmas gift to a partner, spouse or family member, keep in mind that one of the reasons it would be considered an unconventional gift is that it requires consent and signed paperwork from the beneficiary. Another caveat is that the underwriting process takes about four to six weeks. So you would have to let your beneficiary know in November about the early Christmas present.
A
life insurance beneficiary must further prove "insured interest" to the insurer, which means they will suffer a financial burden in the event of the benefactor's death. The benefactor is who offers the protection as a gift.
Who You Should Consider as Beneficiaries
Before deciding on whether you should give a
life insurance Christmas gift to someone in your close circle, make a list of the people you care about who deserve the benefits. These people might include business partners, your children who have reached an adult age, a spouse or siblings. Ideally, your beneficiaries are individuals who respect you and will honor your memory in the ways you would like.
Life Insurance Coverage Types
Different types of
life insurance exist for different scenarios that depend on many factors. It can seem complex at first, but the three main types of life insurance are term life, universal life and whole life. Each one has its pros and cons depending on your situation and the needs of your beneficiaries.
Term
life insurance provides coverage for a certain time frame, which is commonly 10 or 20 years. This coverage allows for a fixed premium throughout the term until the period expires, which can be continued at a higher rate. Overall it's usually the most affordable option.
Universal life insurance is a permanent policy that yields lifetime coverage for recipients. The policy allows for flexibility, letting you increase or decrease your premium payment or coverage as needed. It's typically more expensive than term
life insurance.
Whole
life insurance provides lifetime coverage at higher premiums than term life insurance as well. Premiums, however, are fixed and can be coverted to cash withdrawals like with a savings account. It's typically used for wealth preservation.
Giving life insurance as a Christmas gift to a loved one could potentially be the most special and rewarding gift on earth. Contact the experts at
Fuller Insurance in Southern California today to learn more about how life insurance can benefit friends or family members.
