Life Insurance When Becoming a Grandparent in Nevada

Yes, grandparents can purchase life insurance policies on grandchildren if you have an insurable interest, which grandparents typically do. These policies are usually small whole life policies that lock in very low premiums, build cash value over decades, and can be transferred to the grandchild as an adult. A licensed agent in our network can explain available options.

Many professionals suggest purchasing a permanent life insurance policy — such as whole life or IUL — and placing it in an irrevocable life insurance trust (ILIT) with grandchildren as beneficiaries. This approach provides a tax-free death benefit that is also excluded from your taxable estate, maximizing the legacy value for your grandchildren.

Not at all. While premiums increase with age, many A-rated (A.M. Best) carriers offer competitive coverage to healthy applicants in their 50s, 60s, and even 70s. The key factors are your current health status and the amount and type of coverage you need. A licensed agent in our network can help you compare options from multiple carriers.

There are several approaches many families consider. You can name grandchildren as beneficiaries so the death benefit funds their education, or you can use a policy's cash value to supplement education costs during your lifetime through policy loans (generally not taxable if the policy is not a MEC and remains in force). Some grandparents also fund an ILIT that includes education provisions.

A Nevada dynasty trust can last up to 365 years and is funded by life insurance premiums during your lifetime. When you pass, the tax-free death benefit flows into the trust and can benefit multiple generations of your family without estate taxes at each generational transfer. Nevada's favorable trust laws make it one of the top states for this type of planning.