Saving for LO's future

Flurison · November 2015

Hi Mommies! I wish I had posted this information earlier but didn't really think to share it until I read an earlier discussion regarding saving money for baby. We just got a whole life insurance policy for DD so she can cash in on it later in life. I know the thought of a life insurance policy on an infant is nauseating but I want to stress that this money is for her so that she may cash in on it for her college expenses, wedding, new house, whatever. We chose this specific savings method because Allstate insurance is having a reduced rate for infant girls (why specifically girls, idk). Someone had suggested it to us and we could not find another savings method for DD that will give her as much money as this policy for the amount we are paying for it. For those of you with baby girls (or boys) you might want to look to Allstate for saving for LO's future. Allstate is only doing this reduced rate until the end of 2015 for girls under the age of one year. I hope this helps someone.

jilladelario · December 2015

Check out what Dave Ramsey says about whole life insurance policies. I went through his financial peace series last year and was in class with a couple who had teenagers and when the mom went to cancel them she found out that they were worth a fraction of what they had put in. They had been paying on them for 15+ years but the insurance company said that with fees and the fact that the market had been bad they were only worth less than $2000.

Don't buy whole life insurance. For anyone. Just open a savings account for your kid. Then you know the money will be there in the future.

Flurison · December 2015

@jilladelario Interesting. My parents used to listen to Dave Ramsey and one of his big mantras was to make sure you buy life insurance!!!! Why would the market influence the life insurance pay out? I have never heard of that. That sounds more like stock than an actual insurance policy. The 2 things that may influence the worth of that policy would be inflation and the potential for paying tax on it. I am uncertain what the tax ramifications will be. Apparently that may change from state to state. Regardless I felt it still was worth the investment.

ETA spelling

tarheelgirl8 · December 2015

You should do some reading about the difference between whole life insurance and term life insurance. There's a really big difference. Whole life is generally considered a bad investment. Term life insurance is definitely recommended for adults who would need to provide supplemental income to their dependents in the event of their death. Infants would not need term life insurance because they do not contribute financially. God forbid, if a child passes you're in a better position financially, not a worse one, so there's really no need for term life insurance. (Side note- SAH parents should still consider term life insurance as well even if they don't bring home a paycheck. Would the children need to go to daycare if they died? If so, you may need supplemental support.)

Flurison · December 2015

Yes, I know the difference between whole life and term life policies. I know how investing in a whole life policy can be viewed negatively as there are risks including paying more in premiums than you would ever get cash back on the policy. I would never buy a whole life policy for myself for this reason; it would be a bad investment. For the specific policy we have for LO, I feel it is worth the investment. I put this information out there incase anyone was interested in it but if not, that's okay.

cosplaymom · December 2015

If you want to save for your kids, do multiple things. Here is what I recommend:

First, a Savings account for your kid. This is for a small amount, up to around $600-$1000. If you can only save $10/month, start with a Savings account. You aren't going to grow anything, really, it's basically a cookie jar that is harder to dip into. But when your kid gets older they can put their own savings and allowance in there and take out spending money for special occasions. It can be a good learning tool.

Ultimately you need investments. For us, it's stocks. Invest and watch your money grow. When you want to protect it, move some to an educational fund. But the more risky you can be, the more return you can potentially see. Take advantage of compound interest. Leaving too much in savings where it can only grow by pennies is basically giving banks your money.

Saving for LO's future

Re: Saving for LO's future

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