10 may contract for life insurance. (This seems weird.)
Lol, yes, it is weird. But I can speculate about the reasons for it. It's in reference largely to whole life, universal life, and annuity products. The premium rates on those are based on mortality rates from the age of engagement. Essentially, the insurance company takes the face value of the policy (the amount it pays out in the event that the contingent action occurs), and then amortizes that amount with a standard interest rate over the expected lifetime of the policyholder.
For someone age 10, that's going to result in an extremely low premium rate, even for a $1M policy.
This exception essentially allows for parents to purchase a whole life policy for their child, in their child's name, at very low premiums. And given that the policyholder is the child, then the child keeps ownership of the policy for their whole lifetime. This is in contrast to a "child" policy, where the policyholder is the parent, and the child is the covered life. In that case, the policy expires when the child becomes an adult.
I would bet that the contract requires the parent(s) to sign via power of attorney, not actually allowing the child to sign.
My spouse had one of these. Their mother bought it when they were like 12 or something. It's a $100K policy, with a premium of $19 per quarter. My spouse is the listed policyholder, although their mother was financially responsible for the premium payments until my spouse became an adult.
