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Life Insurance Benefits for Kids锝淭ier 1 Capital - YouTube
Channel: Tier 1 Capital
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are you thinking about buying a life
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insurance policy on a child or
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grandchild
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but aren't exactly sure what the
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benefits of this purchase are
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well stick around to the end of this
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video because we're going to go through
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all the costs and benefits
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of this purchase hi i'm olivia kerr and
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i'm tim urich we're here from tier one
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capital and we're here to show you how
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to regain control of your money
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for the best advice on controlling your
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cash flow please be sure to subscribe to
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our channel and don't forget to hit the
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bell to be notified when we upload new
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videos
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fundamentally life insurance is a
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transfer of risk
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and in most cases it's a transfer of
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risk from
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the insured to the insurance company for
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the case of premature death
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but let's face it when it comes to a
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healthy child
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the risk of premature death is pretty
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low and that's why we think
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what's more important in the case of
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deciding whether or not to
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purchase a policy for a child or
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grandchild
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the more important thing to look at is
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locking in their insurability
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that's right olivia so the reason that
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the most important reason
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that we recommend that parents or
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grandparents purchase insurance for
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their
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child or grandchild is to lock in their
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future insurability
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that is so important because if they
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lose their insurability because of a
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mental or nervous problem
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or a health issue or an occupational
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issue
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they're going to be guaranteed by the
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insurance company through the policy
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writer
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that they will be able to purchase a
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stipulated face amount
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25 000 up to 125 000
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every few years from the ages of 25
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through 40. and this allows them as
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their
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become adults and maybe have have become
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uninsurable now they can take care of
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the things that are most important to
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them their families
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and their businesses that's right so
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adding that guaranteed insurability
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writer
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for just a few dollars a year onto the
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policy for the child
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is going to lock in their ability to
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purchase more insurance
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throughout their adult life which is
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really important
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the next point to consider when thinking
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about insuring a child
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is the cost of the premiums now the
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premiums cost
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much much less for a child than they do
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for an adult
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because the insurance company has many
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more years to collect those premiums
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we often hear from people gee i wish i
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purchased insurance when i was younger
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what better time to purchase the
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insurance than when you're a child
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now obviously a child doesn't have that
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ability but the parents do
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my parents purchased small policies for
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me that
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in case i died they would they would
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have the funeral covered
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well i use those policies today i borrow
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against those policies
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to purchase my computers and every
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couple years
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i pay the money back and then it's time
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to buy a new computer
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well the other practical purpose of
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having insurance we talked about earlier
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was guaranteed insurability
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my youngest son when he was 18 had a
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stroke he's uninsurable
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but he has a large policy with options
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that he can purchase additional
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insurance
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in the future so he can take care of his
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family and his business
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this brings us to our next point and
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that's the savings component of the
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policy you see with every whole life
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insurance policy the insurance companies
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are making two promises
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the first is to pay a death benefit
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whenever the insured dies
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and the second is that the cash value in
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the policy will be equal
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to the face amount at the age of
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maturity
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so the cash value is guaranteed to be
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there
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and because of that aspect of a whole
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life insurance policy
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you're actually getting multiple duty
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dollars think about it
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instead of just putting money away in a
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savings account or a mutual fund or a
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529 plan
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you're also getting a death benefit
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you're also getting future insurability
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and you're also giving them the ability
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to choose
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how they want to use their money and
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it's almost like their money's going to
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be in
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two places at once they'll always have
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access to cash in the policy
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and they can use it for whatever they
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want and the money's going to continue
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to grow
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uninterrupted from on a tax-favored
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basis
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that's right and with the loan provision
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they'll have guaranteed access whenever
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you're ready to transfer the policy into
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the child's name
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once they reach adulthood they'll have
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access to that policy
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they'll have access to those cash values
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they could buy their first car
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they could help fund college they could
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put a down payment on a house
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the possibilities are limitless there's
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no stipulations that say
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what policy loans can be used for the
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only stipulation is that
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it's guaranteed that they'll have access
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to the cash value
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via the policy loans which is a really
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great thing
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for a savings vehicle for a child or a
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grandchild
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so now that we looked at the benefits of
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owning
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life insurance on a child or a
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grandchild
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we have to also discuss the rules
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because insurance companies have special
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underwriting
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rules that they abide by when
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considering offering insurance to a
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child
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the first rule is that the child can't
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have more insurance in place
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than the parent unless there's a good
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reason maybe the parent isn't insurable
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and the second rule is that when the
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child has siblings
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then all of the siblings need to be
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equally insured
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and in the case of a grandparent
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purchasing on a grandchild
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all of the grandchildren would also need
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to have equal amounts of life insurance
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in force
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but once you understand the rules then
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you'll know exactly what you need to do
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in order to purchase the right amounts
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for each child or grandchild
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so to wrap everything up life insurance
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is a unique
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financial tool for children or
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grandchildren
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it could literally protect them from the
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cradle
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to the grave they'll have access to cash
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everywhere along the line
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they can use the money to supplement
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their retirement
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income on a tax-favored basis and then
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they pass away
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and the money goes to their children or
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their grandchildren
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it is a unique financial tool that
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should be considered
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it may not be everybody's choice but it
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definitely should be considered
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and in the conversation if you'd like to
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get started
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with a policy on your child or
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grandchild or would like to learn more
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about the options
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feel free to give us a call visit our
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website at tieronecapital.com
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to schedule your free strategy session
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today
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also if you like this video please be
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sure to give it a thumbs up
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and don't forget to subscribe also
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please leave us a comment down below
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let us know what questions you have
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about life insurance and we'll be sure
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to answer them in upcoming videos
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thanks so much for watching our video
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and remember
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it's not how much money you make it's
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how much money you keep that really
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[Music]
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matters
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