When you think of a life insurance policy for your child, you may find yourself thinking that is morbid, or I would never do something like that. But, in reality the best time to purchase a life insurance policy is when you are young and healthy. Once you learn how these policies work, they can be a great asset for your children throughout their lifetime or to pass onto the next generation.
How do these policies work?
Whole life insurance is a contract between an insurer and the insured for a specified amount with a premium paid on a monthly, semi annual, or annual basis. These amounts can vary from face amounts (death benefit) of $10,000 to unlimited that the budget warrants. The policies can be paid for 10, 20 or the life of the insured, for the purposes of this blog post I will be focusing on the pay for 20-year policies. Pay for 20 years means after the 20 years the policy is considered paid up with no more premiums remaining. Whole life policies grow in value each year, they never go backwards. The death benefit along with cash value continue to increase and compound over time. Dividends are the main attraction for whole life policies because it becomes an asset that can be used while you are still living, the policy can eventually be used as collateral, you can withdraw cash, or can let the death benefit grow and pass onto your beneficiaries.
Benefits of buying for a child
Purchasing a whole life policy for your child can allow you to have the premiums paid off by the time they reach their 20th birthday. This means that the policy will continue to grow for the remainder of their lives without additional funding. By starting so young this will allow the cash value to potentially be accessed for several different life events such as: first time home, education, or retirement. Whole life policies are also a great addition to a RESP, the whole life policy cash value can be accessed for education, but you also have the safety net of the death benefit.
Who Should I Call To Get Started?
If you would like to discuss a whole life insurance policy, it is always best to first consult with the experts as these policies can be complicated and need to be reviewed.
When you think of experts, you think of McIver Insurance. Based out of Halifax, NS, we specialize in all types of insurance matters. If you are seeking medical insurance, health insurance, life insurance, or are looking for a better policy we got you covered!
A quick, free, and no-obligation chat is all you need in order to figure out what insurance plan would be best suited to your needs.