As we approach the season of gift-giving, the search for the perfect present for our children and grandchildren begins. While video game consoles and gadgets may be enticing, let’s consider a gift that surpasses trends, instills financial responsibility, and shapes a lasting legacy – Whole Life Insurance.
Why Whole Life Insurance?
Discussing the mortality of a loved one is never easy, but whole life insurance offers more than just basic coverage; it is a gift that keeps on giving. Here's why considering life insurance for a child is a thoughtful and proactive decision:
- Easy and Affordable: Obtaining life insurance is effortless when young and healthy.
- Future-Proof Protection: Secures today’s rates and coverage, shielding them from potential un-insurability or higher premiums tied to lifestyle, hobbies, and career choices later in life.
- Flexible Plans: Choose between a 10-pay plan (premiums payable for 10 years) or 20-pay plan (premiums payable for 20 years), providing coverage when financial needs are high but discretionary income may be limited.
- Cash Value Options: The accumulated cash value in the policy can be used for educational funding or any other financial needs that may arise.
- Ownership Transition: Transfer policy ownership to the child when they reach legal age or when deemed ready to manage it responsibly.
- Lifetime Contributions: Children can contribute to the policy throughout their lives, even when it's fully paid up to help the policy grow even faster.
- Family Coverage: Ensure essential coverage for their family precisely when they need it most.
- Hands-Off Investment: Unlike other investment options, such as Registered Education Savings Plans (RESPs) or trust accounts, these plans require no regular reviews nor are they susceptible to market volatility.
Consider a $100/month coverage with a 20-year payment plan for a 1-year-old female:
- Age 20: there could be $21,500 for education and a life insurance benefit of $159,229.
- Age 45: there could be $115,000 for investing in a business, buying rental property, or other life needs and a life insurance benefit of $468,141.
- Age 65: there could be $363,000 for retirement and a life insurance benefit of $723,264.
- Age 95: there could be a cash value $1,550,429 and an insurance benefit of $1,731,367 for the next generation.
Whole life insurance for children extends far beyond basic life coverage. It serves as a safe, tax-efficient investment that grows alongside them, providing access for various life milestones. By securing life insurance now, you lock in rates, ensuring protection before potential health or lifestyle challenges affect insurability. The plans offer fixed payment periods, can be seamlessly transferred to the child when ready, and can grow even faster with additional contributions. This holiday season, give the gift that keeps on giving—ask us about the options available for your children and grandchildren. Invest in their future today!
Written by Brad Wendt, BBA, QAFP™| Advisor