#Children‘s Life Insurance Policies
##Understanding Children’s Life Insurance
When it comes to ensuring the financial security of your children, many parents consider investing in life insurance policies for them. These policies are designed to provide a lump sum payment in the unfortunate event of the child’s passing. While it may seem morbid to think about such scenarios, having a children’s life insurance policy can offer peace of mind knowing that your family will be financially supported during difficult times.
##Benefits of Children’s Life Insurance
###1. Financial Protection
– Provides a death benefit to cover funeral expenses and other costs.
– Can help alleviate financial burden for the family.
###2. Cash Value Growth
– Builds cash value over time, which can be useful for future expenses such as college tuition or buying a home.
– Accumulates tax-deferred, meaning you won’t be taxed on the growth until you withdraw it.
##Considerations for Children’s Life Insurance
###1. Cost
– Premiums for children’s life insurance policies are typically lower than for adults.
– You can lock in a lower rate for your child, potentially saving money in the long run.
###2. Dividends
– Some policies may offer dividends that can be used to offset premium payments.
– It’s important to understand when and how dividends are paid to ensure the policy remains cost-effective.
##Is Children’s Life Insurance Worth It?
Based on the provided scenario, it seems like the current policies may not be the most cost-effective option. Considering the cash values and dividends accumulated so far, it may be worth reassessing if the premiums are worth the benefits provided.
Ultimately, the decision to maintain or cancel children’s life insurance policies should be based on your individual financial situation and goals. It’s always a good idea to review your insurance needs periodically and make adjustments as needed.
In the end, the most important thing is to ensure that your children are financially protected in case of an emergency. Whether that means investing in life insurance or other forms of savings and investment, the goal is to provide security and peace of mind for your family.
Yes it’s a waste of money
Whole life bad: https://www.whitecoatinvestor.com/debunking-the-myths-of-whole-life-insurance/. https://www.whitecoatinvestor.com/what-you-need-to-know-about-whole-life-insurance/
Yes, cancel them. Your kids don’t have dependents, therefore they don’t need life insurance. And Whole Life is a bad product for the vast majority of people.
Take the money you’re paying each month and invest it in index funds instead.
Yes, these are stupid to maintain.
If you had put $60/month into the SP500 for the last 8 years, it’d be worth nearly 15k right now. Instead you have 2k and some paltry dividends.
Why do the kids even need life insurance? Are they the breadwinners for their highschool sweethearts?
Are you saying you’ve been paying $56 a month for 8 years and it’s now worth $2420? You put in $5376 and have less than half that now?
You should absolutely keep these policies in place.
For comparison, my kid’s life insurance policy is ~$0.50 per month and provides enough to cover funeral expenses, so we wouldn’t have to dip into our emergency fund.
Thanks everyone. I think I’ll cancel them. In theory, I really didn’t have an emergency fund, index funds I could pull from, etc, when I opened these policies, but I guess I’ll just charge it to the game, be glad my kids didn’t die in the last 8 years and put that $56 somewhere else moving forward.
>I opened NYL life insurance polices for my kids 8 years ago.
Why? Kids don’t need life insurance.
Your kids don’t need life insurance and there are better places to invest
Imagine if you’d done a 529 with that money, you’d have a lot for college
Don’t cancel them yet.
Ask for an”inforce illustration” first and see what you think of them. This will tell you when dividend payments are expected to exceed annual premiums (both guaranteed and non-guaranteed). These policies are way beyond their MEC test, so if your kids may be coming into money at some point in the future, they may be useful for tax shelters.
NYL policies are also premium-based dividend participation policies, meaning you can take the loan out to access the CV without impacting dividend rates. That’s different than NWM where your dividend rate is a direct function of your non-loaned CV.
If the $56 / month is money you **need** elsewhere, then WL is probably a bad product for your family. But if you don’t notice the cash flow, you’re past the “buy-in” window of the products so likely to get better returns in the next 15 years (again: see the inforce illustration).
What you’re paying is ridiculous and not worth it. I have insurance through my work that costs $12 a year and gives me $10,000 should my kid die. We don’t technically need the money (good savings and investments), but I figure it’s so cheap we might as well have coverage so we don’t have to deal with financial stress should we face an unexpected tragedy.
Waste, only purpose is to fund a funeral in the awful chance that would happen