All Life Insurance Tips

A parent buys a whole life insurance policy for a child. Payments end at age 18. Does the child own?

... the policy after he/she turns 18? Or do the parents still own the policy since they are the ones who made all of the payments? Assume that the policy is whole life and has cash value of several thousand dollars. The life that is insured is the life of the child --- not the life of the parent.

Public Comments

1. The owner of the policy is the person who is named as owner, no matter the age of the insured person. If the cash value is good, you may want to cash it in and then purchase term life insurance thereafter. Never buy whole life insurance.
2. The parents still own the policy. Why does anyone insure a child?
3. No, the child does NOT automatically own the policy just because they turn 18. Regardless of who is making the payments, the policy owner remains the policy owner, until they transfer the ownership of the policy to someone else. And, it's EXTREMELY unlikely that a child whole life policy has ANY cash value, when the child turns 18.
4. Depends on what it says in the policy. When parents buy a life insurance policy on their children, the parent usually retains ownership of the policy. In some policies, ownership is transferred to the child when the child reaches between the ages of 18 to 25 years old. Anyway, its a waste of money to buy life insurance on children. It is better to add a child rider to the parent's life insurance policy.
5. The parents are most likely the owners of the policy.
6. the owner of the policy does not change unless paperwork is signed. there are change forms required by the insurance company and the current and new owner would have to sign off on that, if the parent wanted the child to become the owner.