3rd Trimester

Life insurance for your kiddos?

Has anyone purchased (or plan on purchasing) life insurance for their kiddo?  If (god forbid) something were to happen I just want to be financially prepared.  Also, some of the whole life insurance policies for kids out there look pretty good-at least they could put the money towards college!  Any recommendations would be greatly apprecaited!

 

Thanks!

 

Tanya

Re: Life insurance for your kiddos?

  • Life insurance isn't so much going to be a college savings plan... There are a few reasons why you would want to buy it now. a) the younger the cheaper b) if god forbid your child is ever diagnosed with something like diabeties or anything like that they would either not be able to get insurance or they would have to pay a ton for it c) if you buy it now it can be a paid up policy in no time, and d) if say your 22 year old who is a junior in college dies in a car accident, how horrible will it be have to write out a check each month to pay back student loans which could be wiped out by a whole life policy. 

     

  • Whole life insurance is a big rip off. It is so much more expensive because of the investment that is built in but you could get term life for yourself and your DH and then invest money in retirement and come out better in the end. The other thing to keep in mind is that with whole life, when you die your spouse only gets the amount on the insurance policy. If you haven't cashed out the investment part at that point, the company keeps that money. Big rip-off that they don't advertise.

    You and your DH should have term life worth 10 times your income. Most companies will let you add on a kid policy worth around $10,000-15,000 for close to nothing. It is just enough to cover funeral expenses if God forbid something were to happen. You don't need more than that on a kid because they don't generate income. Do all of your college and retirement investing separately in mutual funds.

      
  • image monlyn9:

    Whole life insurance is a big rip off. It is so much more expensive because of the investment that is built in but you could get term life for yourself and your DH and then invest money in retirement and come out better in the end. The other thing to keep in mind is that with whole life, when you die your spouse only gets the amount on the insurance policy. If you haven't cashed out the investment part at that point, the company keeps that money. Big rip-off that they don't advertise.

    You and your DH should have term life worth 10 times your income. Most companies will let you add on a kid policy worth around $10,000-15,000 for close to nothing. It is just enough to cover funeral expenses if God forbid something were to happen. You don't need more than that on a kid because they don't generate income.

    dang bump.

    again. The Most important reason for life insurance for children is for insurability. To make sure you have a policy for them in case God forbid something happens, you won't be able to get a policy on them. (i.e. diabetes, kidney disease, cancer etc). I got a policy for my ds for 20K and it's $12 a month for the rest of his life. not too bad. Plus even if he DOES get some illness that prevents I can always increase his exisiting policy to a higher amount and just pay the difference. No increased rate for medical condition.  This option is called GIO, guarantee'd insurability Option and is very important for children's policies.

    Do not buy a whole life policy for the investment portion, it's a waste. I am an insurance agent, so trust me when I tell you.  It does pay a cash value, but like pp said, you have to use it or lose it. You can also borrow against it as a loan too. Its a nice option and I have seen it help many people, but that's not a wise idea to purchase it for that reason.

    Let me know if you have any questions!!

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  • image RIMROCK:
    Life insurance isn't so much going to be a college savings plan... There are a few reasons why you would want to buy it now. a) the younger the cheaper b) if god forbid your child is ever diagnosed with something like diabeties or anything like that they would either not be able to get insurance or they would have to pay a ton for it c) if you buy it now it can be a paid up policy in no time, and d) if say your 22 year old who is a junior in college dies in a car accident, how horrible will it be have to write out a check each month to pay back student loans which could be wiped out by a whole life policy. 

    If the student loans are in the child's name and the child dies, the parent does not need to pay them back. The only reason a parent would be responsible for any debt of a child is if the parents' name is on the debt as well. 

      
  • image RIMROCK:
    Life insurance isn't so much going to be a college savings plan... There are a few reasons why you would want to buy it now. a) the younger the cheaper b) if god forbid your child is ever diagnosed with something like diabeties or anything like that they would either not be able to get insurance or they would have to pay a ton for it c) if you buy it now it can be a paid up policy in no time, and d) if say your 22 year old who is a junior in college dies in a car accident, how horrible will it be have to write out a check each month to pay back student loans which could be wiped out by a whole life policy. 

    If the student loans are in the child's name and the child dies, the parent does not need to pay them back. The only reason a parent would be responsible for any debt of a child is if the parents' name is on the debt as well. 

      
  • image RIMROCK:
    d) if say your 22 year old who is a junior in college dies in a car accident, how horrible will it be have to write out a check each month to pay back student loans which could be wiped out by a whole life policy. 

    Student loans are forgiven in the event of the death of the borrower. There would be no loans to repay.

     

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  • I must disagree with monlyn... 

     See any extra goes to the beni.  Term insurance is a great thing for covering things like mortgages and other debts.  Think, I need something to cover me and my spouse in the event that one of us dies before this is paid off.  I would want to buy term ins to cover my mortgage so that my husband would not have to worry about how to pay for our house if I died.  Term insurance is not a locked in rate like whole life is either.  Basically your best bet would be to make an appt and sit down with an ins agent to go over all types of possibilites. 

     

  • image monlyn9:

    Whole life insurance is a big rip off. It is so much more expensive because of the investment that is built in but you could get term life for yourself and your DH and then invest money in retirement and come out better in the end. The other thing to keep in mind is that with whole life, when you die your spouse only gets the amount on the insurance policy. If you haven't cashed out the investment part at that point, the company keeps that money. Big rip-off that they don't advertise.

    You and your DH should have term life worth 10 times your income. Most companies will let you add on a kid policy worth around $10,000-15,000 for close to nothing. It is just enough to cover funeral expenses if God forbid something were to happen. You don't need more than that on a kid because they don't generate income. Do all of your college and retirement investing separately in mutual funds.

    This was always my understanding also... funeral costs should be the only financial impact of your child's death.  No matter how much of a policy you take out, no amount of money will ever compensate you for the emotional impact.

  • Sorry, about the student loan thing,  I was meaning if you took one out for your child.  I am a licensed in life and health ins. 

     

  • image RIMROCK:

    I must disagree with monlyn... 

     See any extra goes to the beni.  Term insurance is a great thing for covering things like mortgages and other debts.  Think, I need something to cover me and my spouse in the event that one of us dies before this is paid off.  I would want to buy term ins to cover my mortgage so that my husband would not have to worry about how to pay for our house if I died.  Term insurance is not a locked in rate like whole life is either.  Basically your best bet would be to make an appt and sit down with an ins agent to go over all types of possibilites. 

    Term is a locked in rate (well, any good term is anyway). You pay the same amount per month for the term of the policy. The idea with term is that you can be responsible with your money over the course of your life so that when the term is expired (20 or 30 years down the road) your spouse doesn't need that money. For example, DH and I each have 20 year $500,000 term policies. Over the next 20 years, we will invest in college funds, retirement funds, and pay off our house so that at the end of 20 years when we no longer have life insurance if one of us dies, we will be "self-insured" meaning we won't need that money to survive without our spouse. 

    You need to check out your whole life policy. The insurance amount goes to the beneficiary but the cash value goes to the company if the policy holder dies and has not cashed it out yet. 

      
  • Thanks for the feedback! Who did you get the policy through?

      

  • Both DH and I have life insurance thru our employers.  My parents have purchased life insurance for all of their grandkids thru Gerber, I believe.
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  • image soontobhartwell:

    Thanks for the feedback! Who did you get the policy through?

      

    I don't know who you were thanking but we got our life insurance through Zander Insurance online. They sell for lots of companies so you can get the best deal for you and DH. My DH and I actually have our policies with different companies because we went with the best deal for each of us. We each pay around $25 per month for 20 year $500,000 policies. I was 31 and DH was 32 when we got the policies. We are both non-smokers and I am overweight to give you and idea of cost. Good luck.

      
  • The other thing to keep in mind is that with whole life, when you die your spouse only gets the amount on the insurance policy. If you haven't cashed out the investment part at that point, the company keeps that money. Big rip-off that they don't advertise.

     

     

    Not entirely true. We haave policies that the cash value adds to the death benefit. I have Universal Life policies on my kids that add to the death benefits of my kids if god forbid something happens. If not they can take a portion out when they are older.

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  • You want to pick a life insurance company that has a great rating and you know its not going to disappear any time in the future. Smaller companies might have better premiums, but they might not be the safest investment. (Think AIG almost going bankrupt. Had it been a smaller company and the government wasnt feeling generous, they would have)

    I use USAA for my insurance and banking, but they have strict membership requirements. Its a company that provides financial services to the military and their extended families. Their rates cant be beat and they arent publicly traded, so you get dividends by being a member. Outstanding customer service (they are ranked :-D )

  • Whole life insurance is a big rip off. It is so much more expensive because of the investment that is built in but you could get term life for yourself and your DH and then invest money in retirement and come out better in the end.

     

    This isn't necessarily true.  Most whole life policies will have a higher interest rate for the investment than most banks would...it all depends on what you are comfortable investing in.   I sell life insurance and will not be purchasing a plan for our LO.  I have a whole life policy that I am using for our LO's college savings account, and we would be able to afford the cost of a funeral for a child.  Once they hit 18, I'll purchase one for them at that time.  I work for a company that has some of the strictest underwriting guidelines, and as long as your condition has been managed for 5 years or more, they will most likely approve you, so I'm not worried about that.

    Stephanie Hsu
  • image jessnjacob:

    The other thing to keep in mind is that with whole life, when you die your spouse only gets the amount on the insurance policy. If you haven't cashed out the investment part at that point, the company keeps that money. Big rip-off that they don't advertise.

     

     

    Not entirely true. We haave policies that the cash value adds to the death benefit. I have Universal Life policies on my kids that add to the death benefits of my kids if god forbid something happens. If not they can take a portion out when they are older.

    Whole life and universal life are not the same thing.

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  • image kdodge423:

    image RIMROCK:
    d) if say your 22 year old who is a junior in college dies in a car accident, how horrible will it be have to write out a check each month to pay back student loans which could be wiped out by a whole life policy. 

    Student loans are forgiven in the event of the death of the borrower. There would be no loans to repay.

     

    This is only true if the loan is solely in the child's name. No one I've ever met was able to get student loans (for undergrad at least) without a co-signer. Banks don't just give thousands of dollars to 17/18 year olds without some responsible adult promising to pay it back. In the event of the child's death, the debt belongs solely to the cosigner, usually the parent.

    I took out a life insurance policy on myself with my mother as the beneficiary when I started college for this exact reason. I made the choice (against her advice) to go to an expensive private school and she was nice enough to co-sign my loans. In the event anything happened to me before I pay them off (probably 20 years from now) I didn't want her to lose her savings to pay off my education.

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