I’m a huge believer in life insurance for children especially right when they are born……why? It’s the cheapest and they have their “whole life” to collect dividends. The one thing about life insurance is that the younger you get it the cheaper it is.
So just to clarify….. Whole life insurance is a permanent life insurance vehicle, what it does is it guarantees the same premium for your entire life. So with a younger child that “less expensive” price will be the same throughout their life, even when they reach the age of 60 or 80, (anyone at that age that has tried to buy a permanent product knows it’s prohibitively expensive).
Another great option is the 20 pay……This means that you pay a premium for 20 years and after that the policy is paid for. No more paying for it! It stays in-force and continues to collect dividends the rest of your life.
Now let’s talk about the dividends; To make it simple, while you pay your premium you are rewarded with money that goes into an account, where you can withdraw the money, use it to pay for a higher death benefit in the future or use it as collateral for a loan.
This is perfect for a young child, because they have their whole life to collect these dividends which can add up to huge cash value over time. Not only that, but when it is time for them to buy a house or need insurance later in life they don’t have to purchase as much to cover the mortgage and they can go for Term insurance (the cheaper short term option) to bump up the amount if needed.
For a real life example I purchased whole life insurance for my 9 month old boy, 25K coverage for about $30 a month and I chose the 20 pay, so by the time he is 20 it’s all payed for and I don’t have to fork out another penny. On top of that he has collected 10K in cash value and that death benefit has gone from 25k to 40k and even though at that point I have stopped paying for the policy, it will continue to grow, for example at age 32 he will have 15K of cash value and his death benefit is at 60k. Fast forward to when he will be 60, 70k in cash value and 150k in death benefit.
All this for $30 a month for 20 years, which equals $7,200 in total, it just seems like a no brainer to me! (of course prices will vary by age, gender and amount of coverage, as well as the dividend collection)
Anyway…. I will stop rambling because this can become quite complicated without having all my calculations and reports to go through. I always love questions so feel free to ask away and my contact info is below.
I’m always around to help…. Cheers!