How a parent can purchase life insurance on adult child?

First, ask yourself why you want to buy life insurance for your adult child. The insurance can help you save up for a future need (such as the child's college fund), or to ensure that he is financially stable when the time comes that he has his own family.  Please remember that having an insurance policy at an early age will help ensure that your child has coverage, even when your child's health deteriorates or when he gets involved with a hazardous occupation.

You should also consider whether you will remain the policy owner (where you have control over the policy, such as the decision of who to name as the beneficiary) or, since the child is already an adult, to transfer the ownership of the policy to your child.

When you have determined what kind of life insurance you would like to provide to your child, you should:

• Look at your budget and consider how much you will set aside for the monthly premiums of the life insurance.
• Consult with an agent to determine what kind of plan you should buy.
  • Most life insurance agents will recommend a universal life insurance plan, where the policy gets to accumulate cash value which your child can use for future needs. This will provide for more flexibility in the payment terms.
  • If you are thinking of permanent premiums, as well as the accumulation of cash value, they will recommend a whole life insurance policy. This will provide continuous cover for your child at steady premiums.
  • If your budget could not cover the premiums of these two products, you can also opt for term, but be reminded that the premiums for term will increase over time.
• You will need to get your adult child's authorization that you will buy life insurance for him. He will also be the one who will sign the life insurance application.
• Usually, a physical exam will be required. Have your child submit to blood and urine tests, as well as to authorize the insurance company to have access to your child's medical records.

• Why is life insurance important?
• Is group term life insurance coverage affordable?
• How is the term life insurance cost determined?
• How do you compare universal life insurance quotes?
• Should I buy return of premium term life insurance?