Buying Your Child Life Insurance
It's not easy to think about buying life insurance for your child because it brings thoughts of death and your child into the same arena. There are reasons for children to have life insurance policies that have more to do with creating financial benefits your child can enjoy throughout their life as opposed to paying out on their death. Does that change how you look at purchasing life insurance for your kids?
Life Insurance for their future - Life insurance premiums are based on the health and age of the person applying for the policy; as your child ages it will become more expensive to buy their own policy, even if their health is perfect. When you invest in a life insurance policy while your child is young, they can be locked into a low premium they can enjoy for the rest of their lives, as long as the policy premiums remain paid and don't lapse.
Buying a life insurance policy for your children now can have a positive effect on their financial future as well as on the lives of your future grandchildren.
Creating Cash Values - Whole life policies accumulate equity for the policyholder in the form of cash values. These cash values can be borrowed against, creating a tax-free loan and can also be received if the policy is surrendered (though this may be a taxable event). Allowing cash values to accumulate in an insurance policy also creates a tax-deferred home for growth that does not have a restriction on spending of the loan proceeds.
These cash values can grow in several different ways. For conservative growth look at a fixed rate policy or for more aggressive growth, you can look into a variable and indexed policy. Indexed or variable policies have subaccounts with underlying investments that can go up or down with the market.
This accumulation of cash and growth gives your child access to a fund that they can use to help pay for college expenses, make a down payment on a home, buy a car, and so on. This gives them a huge financial advantage, saving them interest (the interest on cash value loans is paid back to the policyholder) and freeing them from the burden of loans that are placed on so many young people trying to get a head start on life.
We all know that at any time, the unthinkable is possible. A life insurance policy has the burden of being the one type of policy that is ultimately useful when only the unimaginable, the loss of a loved one, occurs. But that doesn't mean its only use has to be one associated with a time of loss and grieving. When you buy your child a life insurance policy, you don't have to focus on the morbid possibility of loss. Instead, you can focus on helping the bright and happy future of your child be more financially stable and hold even more exciting options for growth.
Life Insurance for their future - Life insurance premiums are based on the health and age of the person applying for the policy; as your child ages it will become more expensive to buy their own policy, even if their health is perfect. When you invest in a life insurance policy while your child is young, they can be locked into a low premium they can enjoy for the rest of their lives, as long as the policy premiums remain paid and don't lapse.
Buying a life insurance policy for your children now can have a positive effect on their financial future as well as on the lives of your future grandchildren.
Creating Cash Values - Whole life policies accumulate equity for the policyholder in the form of cash values. These cash values can be borrowed against, creating a tax-free loan and can also be received if the policy is surrendered (though this may be a taxable event). Allowing cash values to accumulate in an insurance policy also creates a tax-deferred home for growth that does not have a restriction on spending of the loan proceeds.
These cash values can grow in several different ways. For conservative growth look at a fixed rate policy or for more aggressive growth, you can look into a variable and indexed policy. Indexed or variable policies have subaccounts with underlying investments that can go up or down with the market.
This accumulation of cash and growth gives your child access to a fund that they can use to help pay for college expenses, make a down payment on a home, buy a car, and so on. This gives them a huge financial advantage, saving them interest (the interest on cash value loans is paid back to the policyholder) and freeing them from the burden of loans that are placed on so many young people trying to get a head start on life.
We all know that at any time, the unthinkable is possible. A life insurance policy has the burden of being the one type of policy that is ultimately useful when only the unimaginable, the loss of a loved one, occurs. But that doesn't mean its only use has to be one associated with a time of loss and grieving. When you buy your child a life insurance policy, you don't have to focus on the morbid possibility of loss. Instead, you can focus on helping the bright and happy future of your child be more financially stable and hold even more exciting options for growth.