LIFE INSURANCE ON YOUR CHILDREN AND GRANDCHILDREN. IS THAT A WISE DECISION?
Several years ago, when I was relatively new to the Life Insurance Industry, I met with a prospect who was in his early 40’s. He was interested in securing Whole Life Insurance protection for his two sons. I performed a Needs Analysis and during the process I discovered that he himself had a Whole Life Insurance policy. This in itself was not surprising. What I found to be very enlightening was the fact that his father had the foresight to purchase the policy for him soon after his birth.The policy had a Death Benefit of $200,000 and had accumulated a tremendous amount of Cash Value. It was also a policy that paid Dividends. The Dividend accumulation was large enough to pay the Annual Premium on this policy. The prospect wisely chose not to use the Dividends in that way but to continue to pay the premium that was less than $200.00 per year. If he had purchased that policy at his present age, the premium would have easily been over $200.00 per month, if he was in good health.
I also discovered that this prospect was not in good health. He had several health issues to contend with. To further complicate the issue, this prospect was a tobacco user and was over weight. In view of this additional information, if he was even able to purchase this policy, the premium would have exceeded $400.00 per month. Did his father act in the best interest of his son? You bet he did.
Please keep in mind that we never purchase Life Insurance protection on our children or grandchildren to profit by their demise. Rather, we purchase Life Insurance protection on our children and grandchildren to take advantage of the affordable rates and to guarantee their future insurability. Let’s face it, we never know what misfortunes our children will encounter as they grow older.
Much of our Agency’s activity focuses on the Children’s Insurance market. One very popular product with Parents and Grandparents features a Death Benefit of $20,000 at an $11.00 per month premium. That premium is guaranteed for 20 years and may never increase. What makes this product attractive is the fact that while the premium remains stable, the Death Benefit increases as the child grows older. The Policy Owner may elect to increase the premium. The result is that the Cash Value will accumulate at a faster rate. The Policy Owner may also elect to increase the Death Benefit subject to underwriting guidelines.
My three year old granddaughter has one of these plans. If no changes are made, by the time she reaches retirement age, the Death Benefit will have increased to over $30,000. For additional information on this or other products, please contact our office.