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Should you buy Cash Value Life Insurance for your Kids?
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- Опубликовано: 6 авг 2024
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Does it make sense to get a Cash Value Life Insurance policy for your kids? Is Life Insurance for Kids expensive? Let's explore the pros and cons of juvenile policies.
Key Points:
Introduction to Juvenile Policies: The discussion introduces the concept of cash value life insurance policies for juveniles, highlighting their potential benefits and addressing common questions regarding their suitability for children.
Pros of Juvenile Policies: Key advantages of these policies include no earned income requirement (unlike Roth IRAs), no age restrictions for accessing funds (avoiding the 59 and a half rule of IRAs), and the significant advantage of time, which allows for compound interest to significantly enhance the policy's value over many years.
Cons of Juvenile Policies: Challenges include the requirement for parents to have coverage often before obtaining a policy for their children, limitations on the amount of coverage based on the parent's own coverage, and policies being generally not priced as competitively for juveniles as for adults.
Comparison to Adult Policies: An example is provided comparing the financial outcomes of policies for a 17-year-old and an 18-year-old, illustrating that juvenile policies are not always priced advantageously. The example shows that an 18-year-old with a preferred plus rate class can secure a policy that may yield better financial outcomes over time compared to a juvenile policy.
Recommendation for Policy Reevaluation: The video suggests reevaluating juvenile policies once the child reaches adulthood to potentially secure a more favorable rate class and improve the policy's financial performance.
This summary provides an overview of the considerations for cash value life insurance policies for juveniles, weighing the pros and cons, and suggesting a strategic approach to optimizing policy value as the child matures.
Thank you for always making things easier for us. As an Insurance Agent, I always set a calendar as reminder for my juvenile policies upon reaching age 18, arranging meetings with underwriters for updates. Another drawback for juveniles is their ineligibility for certain riders, such as those covering chronic and critical illnesses.
thank you, I have policies on my young kids. I will certainly take that advise when they turn 18 and contact the carrier to re-classify rating. much appreciated for the content
Your videos are always so informative and to the point without any extraneous BS. Love it. Thanks very much.
Glad you like them! We take this seriously and it means a lot that they are helping people.
Interesting! I didn't know that the rate class was different.
One major change that I'm loving is the new 529 rule. Originally, I wasn't planning on opening a 529, but now I can roll over 35k into a ROTH IRA for my kids if they don't use it or don't go to college. And it doesn't require earned income. For 18 years of compounding though, it's only about $60-$80 per month. Anything above that I'm thinking an IUL is the way to go (or, obviously you'd forgo the 529/ROTH if you don't want the 59.5 age rule).
Excellent post! Your favorites for juvenile policies?
Appreciate the comparison. The cash value in the early years looks very low, was this high base, no or low PUAs? Are these efficiently structured?
Is there a thing as a 2nd to die IUL policy that you take out with you and your young adult child? Thinking to use it as a vehicle to primarily grow the cash value for the parent at a cheaper insurance cost
What kinda of DB is appropriate for my college kids 19 & 20, yearly premium of $12k each x 15 years?
Thanks
Each product can be a little different. The best option is to compare several min DB / max funded options across different carriers. Our team would be happy to help with this if you need it - you can book time here: leveragedwm.com/bookmeeting
Are loan provisions similar on juvenile? Reason I ask is somw yt influencers are pitching IUL as better alternative than 529 college plans.
It’s better 529 College Savings has a penalty if used for anything other than qualified education. IUL is more flexible
Both my son and I have a policy with transamerica does that mean I can only buy my daughter a policy from transamerica or I can choose a different company?
@@johannemonfiston7484 Hi Johanne, you can have multiple life insurance contracts with different companies.
Why not just invest in a mutual fund cash account for the child? The gains over 20-30 years will still exceed what you get in return in a insurance investment policy even with tax being paid. If the returns are 10% annual on a regular market index fund VR insurance investment that pays 1-2% to defer tax gains what is the upside to this? If you say I get a policy on a child just why not buy term life insurance if I want that for them.
Which market pay 10%?
@@CCTENG2022 I was wondering the same thing as well. Managing funds that you think you are going to be smart about, and filing taxes on 1099s every year... how does the 2 options compare?
Furthermore, many times we are naive to the fact that life sometimes throw curve balls, and the well intended continued contribution doesn't execute as planned, or the rebalancing necessary to stay in the right asset allocation which drives 80% of returns says research...
Finally, where do you hand over say $250 monthly to an investment vehicle and have immediately bought yourself access to let's say $250K of Life Insurance AND living benefits (if properly structured) in peace of mind protection, until you build up the cash value in this option🤔🤔
Finally, policy can be structured to mimic an Index. Now you are making 8-9% tax free, following Buffett' Rule #1 and #2, don't lose money.
Aye @CCT, I like this option better💯😎
I was wondering the same thing as @CCT above as well. Managing funds that we think we are going to be smart about, and filing taxes on 1099s every year... how does the 2 options compare?
A place for each, but not to be compared😊😮
Furthermore, many times we are naive to the fact that life sometimes throw curve balls, and the well-intended continued contribution doesn't execute as planned, or we falter on the rebalancing required to stay in the right asset allocation which drives 80% of returns, says research...
Finally, where do you hand over say $250 monthly to an investment vehicle and have immediately bought yourself access to let's say $250K of Life Insurance AND living benefits (if properly structured) in peace of mind protection, until you build up the cash value in this option🤔🤔 Especially for young people startingto build wealth!!🤔
Finally, policy can be structured to mimic an Index. 100%!! Now you are making 8-9% tax free, following Buffett' Rule #1 and #2, don't lose money. Making compounding work for you over that long time horizon! With access to those funds, on top of it, without having to take capital gains and pay taxes, or needing to replace it...
Not to be compared at all...
You answered your own question with this. That’s why iuls aren’t the way.
Tax brackets are more likely to increase in the future
You shouldn’t buy IUL for yourself 🤣
Just wait until this guy figures out that every benefit of IUL is available in a regular taxable brokerage but without the cons and without paying commissions and fees 🤣