Making the decision to apply for life insurance is one step closer to financially breathing easy in the event of your unexpected death. It’s a layer of protection and a selfless gift to your family. You might even want to keep the feel-good train running by buying life insurance for another loved one, such as your child, spouse, or parent.
While it is possible to purchase life insurance for a loved one, we believe focusing on individual term life insurance is best. Here’s why.
Why You Can’t Take Out a Life Insurance for Someone Else Through Ladder
There are a few reasons you can’t buy life insurance for someone else, and one includes age eligibility. Ladder offers coverage to those between ages 20 and 60, as of their nearest birthday, which excludes children and grandparents. One reason for these guidelines is that we need the insured to be able to sign the documentation themselves to make the policy active; another is that it’s illegal and considered fraud to sign someone up for a life insurance policy without their consent.
Some companies do allow you to have a joint policy between spouses, or allow you to take out a policy on your children. But we believe it’s in everyone’s best interest to apply for their own individual term life insurance policy to get an accurate quote, and so that it's transparent to all parties what the policy is and how it could be used should something happen.
You can, however, pay for someone else’s policy. Sometimes spouses have both individual policies linked to one single credit card, or you might be paying for your adult child’s insurance or vice versa.
Can I Add My Minor Kids as Beneficiaries?
Naming your minor child as a beneficiary seems like the right thing to do—after all, any death benefit left to them should you pass would go towards necessities and things like school and housing. But naming your minor child as a beneficiary can lead to complications should you end up dying. Simply put, life insurance companies are not allowed to give payouts to minor children, and instead will go to the minor’s designated guardian. Payout of the death benefit could be tied up in legal issues and can result in having a court-ordered custodian overseeing the funds if there is no designated guardian. That court-ordered custodian might not have your child’s best interests in mind or be motivated to act on any non-legal wishes. It could also delay the payment. So while Ladder technically accepts minors as beneficiaries, you’ll want to make sure you understand exactly what those implications could be should you pass away.
You can work around this by setting up a trust through an attorney or instead naming your spouse, family member, or a trusted caregiver as the beneficiary. Adult children are eligible to be named as beneficiaries.
Giving your family the gift of life insurance is priceless, and a huge step in assuaging any potential future financial anxieties. If you’re ready to get started, figure out how much coverage you need with our life insurance calculator.