Is life insurance for toddlers necessary?
I am being hounded to get my toddler life insurance before it goes up.
Answers | 4
Do the toddlers have any income or any debts to pay? Keep in mind that some toddlers may be part of a trust- in this case speak with your estate attorney/executor and/or give us a call to dive deeper into this.
There are 2 ways to value life insurance. There is no way to put a value on a life.
1. Loss of $$ due to death of the primary earner (lost earnings calculation)
2. Lump sum value to pay off all debts in case of loss ( debt value calculation)
You can contact us directly for more information or even refer the ones "hounding" you to contact us no obligation.
Hope this helps.
The other thing which is the hard side of this question is what happens if a child dies? Where does the money come from for a service? Where does the money come for a headstone? Where does the money come from to cover for the loss of time at work? If something terrible were to happen, does not being able to afford things come into play? Would you want them to? Would you want to tell your spouse "no, we can't afford that headstone."?
My kids are adults now and thank god I never had to use their death benefits. I am passing those childhood policies onto them soon (when they marry) as help with the foundation of their financial plan.
The point is this; focusing on the parts of life insurance that work for you will gain you some things that you can't find anywhere else, and the time to set it in motion is when children are young, the cost is low, and the passage of time will increase the cash value beyond what you may imagine.
Here is some math for you: This is in addition to premiums, $200/month ($2400/yr) paid directly into the cash portion gives you around $51K after 18 years of payments. Keep in mind that the MEC regulations apply and there are many other restrictions on how much you can take out.
From an Investment management perspective. This same $200/month could become $182K after 18 years of payments. You could set this up as a 529 plan or however you need it.
There are also some PPLI plans that are great for key employees and Estate planning. They also have restrictions.