Insurance Advice For Grandchildren With Young Families Of Their Own


When grandchildren begin their financial life, good advice about their personal insurance selections can save them a fortune and perhaps spare them a ton of heartache. The foundation of a young family’s personal insurance plan consists of life insurance, disability insurance and medical/health insurance. 

Life insurance

When starting a family, the key question is, “How much life insurance do I need?” With today’s high cost of raising a family, the face amount of a life insurance policy probably needs to be at least $500,000 to $750,000.

Term life insurance, guaranteeing coverage for 20 or 30 years, has a less expensive premium than “permanent” coverage. Whole life insurance and its cousins of Universal life and Variable life have lapse rates as high as 90 percent after 10 years. Young families, faced with so many financial pressures, often drop these policies and lose all or most of what they paid in. This high lapse rate on “permanent” policies generates high profits for life insurance companies.

In one’s late forties, fifties or sixties, a case can be made for owning some permanent life insurance. The policy can serve a variety of needs, including the financial protection of a surviving spouse or paying for final expenses.

Disability insurance

When your grandchild lets someone talk them into buying a permanent life insurance policy, it often consumes so much of the family insurance budget that money cannot be found for owning disability insurance. A person is eight (8) times more likely to suffer a disability lasting longer than 90 days than he or she is likely to die. Disability insurance keeps money flowing into the household if one is injured or ill and cannot work for an extended period of time.

Disability causes more than 50 percent of home foreclosures in the United States.

The fine print language matters most in disability insurance. A policy needs to protect one’s own occupation, not the ability to work just anywhere. Known as “own occupation” policies, they pay if one cannot perform the basic duties of his or her occupation. By comparing top companies, an independent health insurance broker can assist in finding the disability insurance policy that fits best given one’s occupation and needs.

Health/Medical insurance

A Health Savings Account (HSA) qualified medical policy provides lower premiums and powerful tax benefits. An insurance company provides the high deductible health plan; while one’s financial institution of choice provides the HSA account. Wells Fargo, for example, shines as a leading provider of HSA accounts. Unlike “Flexible Spending Accounts” in an employer-based medical plan, money not spent each year from the HSA account rolls over to the next year. You do not lose what you do not use. One receives a tax deduction the moment a deposit is made to the account, and one can use it for medical and dental expenses incurred until satisfying the deductible.  

When compared to standard co-pay type health plans, premiums on HSA qualified high deductible plans tend to be significantly less. Over time, the savings and tax benefits snowball.  One can own both an HSA and an IRA.


As seniors, our health insurance selections involving Medicare and prescription plans, medigap and long-term care insurance have entirely different considerations. However, this triangle of protection for our grandchildren, consisting of term life insurance, own occupation disability insurance, and an HSA qualified medical plan, can help launch them on a course of wise financial management, while at a tender age. Please feel welcome to make copies of this article, and share it with your grandchildren.

About the author

Tom Russell is a health and life insurance specialist, serving Arizona and the Rim Country since 1993. He can be reached at 474-1233 or online at


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