Life Insurance: A Head Start & A Future Gift

There are so many things we can spend our money on, some things frivolously and some things financially smart for our well being either now or in the future. We all have our own views on savings and budgets and where we choose to save or what type of coverage we have.

For the last 2 years I’ve been looking into life insurance for my son. Now in hindsight I wish I had done it 8 years ago when he was born, but we finally settled on a policy I was comfortable with. You might now be thinking… “who gets a life insurance policy on their child?” but let me explain further.

Money Matters 1920x770The reason I looked into this was so he would have coverage for life. We don’t ever plan on using this policy, nor do I wish for his future family ever to. However, he does have coverage in place now until he is 100 years of age. The advantages of securing a policy when they are younger are the limited pay options at lower costs. In our case, we only have premiums for 20 years. After that his policy continues to exist until he is 100. He will never need a further medical or a need to renew, further premiums or a change in rate over the 20 years in which we pay.

Some of the policies available have savings portions built into them. Although his cash value of the policy will grow, and with interest,  I personally was more concerned with a policy that maintained coverage for life (no further medical or application) and wasn’t looking for a savings plan in particular.

Most people forgo carrying life insurance once they are well established, mortgage is paid off, or premiums just get too high, and if he too at 50, 60 or 70 years of age decides he no longer needs a policy like this for his family, he can cash it out for substantially more than what we’ve paid in. He can also choose to keep it for life for protection of his future family or grandchildren even.

In my opinion, diseases are getting more prevalent, we seem to hear about someone we know with a loved one and cancer daily. Life insurance is only going to get harder for people to obtain as they age, family histories, and the environment that we live in. This is a gift that will ensure he never will have the struggle of choosing between a high premium and protecting his future family. They will already have protection and peace of mind.

What I wanted to share most was a few things I learned while researching and reviewing several illustrations over the last two years. I set out with specific criteria I wanted – only to use a bigger well known company, not a savings venue but rather a lifetime policy (some really focus on this savings aspect), only a specific period of payments (not a term policy or paying forever) and various price points depending on coverage.

Here is what I have learned:
  • A broker not tied to a particular company can give you more options. Some agents are only permitted to sell from their company, meaning you do not necessarily get the best rate or policy. Ask these questions.
  • You have to look at guaranteed values rather than projected with interest as they are not guaranteed amounts (they differ greatly!). It is great to forecast and look at these projected rates, but only bank on what is fixed.
  • There are so many types! Term, Whole Life, Universal, and ones which layer or convert to one or the other in time! Read, research and read some more!
  • Shop around! Rates differ greatly!
  • Know the company you are settling with. Research them and check with the BBB and try for word of mouth too!

In the end we settled on a policy using the services of Karl Marshall of Marmac Financial Services. We even decided on paying a little more than we initially intended and went with a bigger policy ensuring he had ample coverage and never a need to get more coverage or a second policy. This might be something you never thought of but would like to pursue. Maybe you would like to look at coverage for yourself if you don’t already have that in place. Quotes cost nothing so you can always do a little research before deciding! We all have differing opinions on what is important to spend our money on and we felt was something beneficial for his future, in addition to saving for his education.

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