What are the reasons for life insurance on children?

LGilmore · 06-02-2008, 04:20 PM

"Is there any maximum that you are allowed to put on a child without proving that there is some kind of potential loss to protect?"

While not aware of any law, I would imagine most companies have some sort of threshold they won't go above without special circumstances (ie.. child star)

I know the GIO is often a function of the base face amount. I haven't written a kid's policy in a while but I think for the carrier I used it was something like the GIO couldn't be greater than 2x the face. It's been awhile, I could be wrong.

nmyrtlebeach · 06-11-2008, 11:30 PM

Got a question?

I you take a policy on your grandkid and you die who pays the premiums?

LGilmore · 06-12-2008, 01:31 AM

"I you take a policy on your grandkid and you die who pays the premiums?"

Going to depend on the company and policy provisions. Been awhile since I wrote a kids policy but I believe we had riders to address that.

NewHealthStrategies · 06-15-2008, 11:49 PM

Insure your assets.... not your liabilities.

I think kids fit into the later category, unless your Billy Ray Cyrus.

rocky top buzz · 06-16-2008, 05:09 PM

My son is 4 months old and I bought a $100k permanent policy on him. The premium was $17 a month for life-pay, or $22 a month for 20-pay. I went with the 20-pay so when he's 20 years old I will be able to give him a policy that will require no future premiums.

Why did I do this? If he lives to adulthood, it will be a nice gift for him. If God-forbid he dies as a child you have to consider a period of grieving, a period in which I probably will not be able to work as hard and make as much money, thus the death benefit will supplement my income.

If a grandparent takes out insurance on the child and then dies, the question is who is the owner? If it's the grandparent, then the responsibility of paying premiums will fall to the estate (meaning the policy will probably lapse). You should name a contingent owner in order to make sure premiums continue to be paid.

NHS, If you insure assets and not liabilities, are you also suggesting that no insurance is needed on a non-working spouse if there are no children still in the home?

NewHealthStrategies · 06-16-2008, 10:27 PM

Originally Posted by rocky top buzz

NHS, If you insure assets and not liabilities, are you also suggesting that no insurance is needed on a non-working spouse if there are no children still in the home?

Just like dental insurance.... waste of money.

In other words, yes I believe that!

LGilmore · 06-26-2008, 02:24 PM

"Just like dental insurance.... waste of money.

In other words, yes I believe that!"

Still on your first wife?

There is a logic to your point. But not having kids also is a better financial choice as well and also is very logical.

I'd rather be a dad. screw logic.

xosephchu · 09-01-2008, 09:44 AM

At some point in life, life insuarance may not be an option but a necessity especially when applying for loan for property purchase, insurance may be required by the lending institutions.

So it is only a matter of time a person requires insurance.

Furthermore, there are advantages for kids to have insurance. The premiums are generally lower because of age, health and occupational factor.

Generally kids are healthier and do not have any occupational risks. There is already some substantial savings in premium in addition to accumulating cash value early.

BiggitySwat · 09-01-2008, 06:44 PM

Here's just my opinion, but I have many clients who buy perm life policies from me IF they appreciate and have the following goals:

Example: $100K face value Equity Indexed UL, with the average index returns being at roughly 7%:

- Cheap insurance to assist the family if something happens to the child. Will pay for burial and loss of income from psychological distress.

- Locking in a very low target premium, guaranteed for life, so that the child can have life insurance for his/her OWN family in the years to come, without dealing with underwriting or increased premiums.

- Having the option to overfund the policy below the MEC limit in order to use the index's interest rate to generate cash value. The tax-advantaged cash value can then be tapped in the future to assist in paying for college, or even accumulate to be a decent-sized nest egg retirement savings for the child.

- The cash value in the EIUL would not be counted towards eligibility for Federal FAFSA financial aid - another bonus for college planning.

- The EIUL can also be used as collateral to qualify for a better interest rate on a loan - for example, if the child has little credit but wants to buy a house or buy a car, the cash value (up to a certain %) can be used to help qualify for a loan with a bank.

- "Kill two birds with one stone." Enjoy affordable insurance for the child while also accumulating cash value in an indexed savings account that has the potential to outperform a bank CD, especially with the tax advantages.

The Rabbi · 09-01-2008, 07:56 PM

Originally Posted by moonlightandmargaritas

This is not the way true advisors think.

This is the way salespeople think.

You don't have any idea what you are talking about. What would you know about what true advisors think. I am a true advisor and professional salesman, recruiter and trainer and I say you are wrong. Don't ever speak for me or anyone else.

The Rabbi · 09-01-2008, 08:01 PM

Originally Posted by NewHealthStrategies

Insure your assets.... not your liabilities.

I think kids fit into the later category, unless your Billy Ray Cyrus.

You have it backwards. I hope you don't have children and let them know they are a liability.

The Rabbi · 09-01-2008, 08:10 PM

Insurance is the foundation of any financial plan. Mutual funds are not the replacement. Remember 'buy term and invest the rest' was a failure because the people didn't do the investing. Millionaires buy WL because they are dumb?

WL on children is a smart idea. And I don't include riders. I like the idea of 20 pay life for a baby.

Plenty of children die and it can be a financial disaster when for a few dollars a month they can be covered and all the other benefits with WL.

And no, it not meant as an investment. It protects the parents assets and is simple to explain.

Families grow financially because of life insurance.

moonlightandmargaritas · 09-01-2008, 08:27 PM

Originally Posted by The Rabbi

You don't have any idea what you are talking about. What would you know about what true advisors think. I am a true advisor and professional salesman, recruiter and trainer and I say you are wrong. Don't ever speak for me or anyone else.

Rabbi, with all due respect I have forgotten more about insurance and financial services than you know.

I have roughly 6 times your level of experience (17 plus years versus what, 3 for you?).

I've been successful for a long time in this business, while you've been professionally advising people on what, a car purchase?

Get real.

GreenSky · 09-01-2008, 08:32 PM

Originally Posted by The Rabbi

You have it backwards. I hope you don't have children and let them know they are a liability.

Unless and until your children support you, they are a financial drain. This makes them a liability.

Econ 101.

Rick

al3 · 09-01-2008, 10:30 PM

Originally Posted by moonlightandmargaritas

Rabbi, with all due respect I have forgotten more about insurance and financial services than you know.

I have roughly 6 times your level of experience (17 plus years versus what, 3 for you?).

I've been successful for a long time in this business, while you've been professionally advising people on what, a car purchase?

Get real.

We're supposed to BELIEVE the above from a guy who posts from the shadows? Talk about "get real!"

BiggitySwat · 09-01-2008, 10:58 PM

After you grown men are done out-pissing each other on an insurance agents' internet message board, you can feel free to criticize/comment on my little list

LGilmore · 09-02-2008, 01:26 AM

"can feel free to criticize/comment on my little list "

You forgot the GI rider.

BiggitySwat · 09-02-2008, 02:01 AM

Originally Posted by LGilmore

"can feel free to criticize/comment on my little list "

You forgot the GI rider.

What's that?

mickeyma · 09-07-2008, 06:17 PM

Pay for final expense--funeral, burial, medical costs. Add children insurance rider onto policy---$6 a month gives each child $10,000.

LGilmore · 09-07-2008, 10:53 PM

GI?

Guaranteed isurability rider or known by other names. Basically a futures option on a policy that allows at specific points in time or life events (marriage, birth) for your child to increase their life coverage WITHOUT medical underwriting or whizzing into a jar.

Simply an option that takes away a carrier's ability to say "no" or "yes, but table D" to your kid.

How valuable is this as an option? it all depends don't it?

How valuable is taking the word "NO" from an insurance company's vocabulary? The answer may depend on your experince in this business.