Children Life Policies
A whole life insurance policy for a child is a permanent policy that provides lifelong coverage and includes a cash value component. You or a close relative, such as a grandparent, can purchase the policy for a minor and transfer ownership to them when they become an adult.
Benefits of children's whole life insurance
Guaranteed future insurability: A child's policy guarantees they can have life insurance for their entire life, even if they develop health issues later on that might otherwise make them uninsurable or very expensive to cover.
Locked-in low premiums: The younger the insured person, the lower the premium. By buying a policy for a child, you lock in a low rate that will not increase throughout their lifetime.
Cash value accumulation: The policy includes a savings component that grows over time on a tax-deferred basis. The adult child can access this cash for expenses like college tuition, a down payment on a house, or other financial needs.
Affordable coverage: The premiums for children's policies are typically low, often ranging from $10 to $30 a month, depending on the coverage amount.
Guaranteed purchase options: Many policies include a rider that allows the insured to buy additional coverage at specific life events (e.g., getting married or having a child) without another medical exam.
Indexed Universal Life (IUL) for children is a financial strategy that combines lifelong life insurance with a cash value component designed to build wealth over the child's lifetime. Parents can start these policies with relatively low premiums, potentially providing a substantial, tax-advantaged financial foundation for their child's future.
The Benefits of a Children's IUL
Early Start on Wealth Accumulation: Starting an IUL at a young age allows the cash value to benefit from compound interest for decades, significantly maximizing growth potential.
Guaranteed Insurability: A policy initiated while the child is young and healthy locks in low premiums and ensures they will have life insurance coverage as an adult, regardless of any future health conditions they might develop.
Tax Advantages: The cash value grows tax-deferred, and funds can be accessed later in life through policy loans and withdrawals that can be structured to be tax-free.
Flexible Access to Funds: The accumulated cash value can be used for a variety of purposes, including funding a college education, a down payment on a first home, starting a business, or supplementing retirement income.
Downside Protection: IUL policies often feature a 0% floor, meaning the cash value will not decrease due to market downturns, even though its growth is linked to market indices (subject to caps).
Adaptable Over Time: As the child grows into an adult, the policy can adapt to their changing needs, with the option to adjust premiums and coverage levels.
