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Re: Life insurance for teen
[Re: M48scout]
#4097578
03/08/24 08:53 AM
03/08/24 08:53 AM
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Joined: Jan 2014
Posts: 117 Mobile, AL
Wahoo
3 point
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3 point
Joined: Jan 2014
Posts: 117
Mobile, AL
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I don’t understand a child needing life insurance. You aren’t insuring against a loss of income from them dying. And if it’s an investment perspective, they would better off creating an investment account ESPECIALLY at that young age. If nothing else a no/low load index fund that you put that same $$ toward each month.
Sounds like you just heard a talk from a whole life salesman. Best advice on here. Coming from a 50 year old whose parents bought all the kids life insurance in 1984 when the interest rate on the policy was 12%. Do I still have it? Yes, but I don't think it was a good deal, even though with a guaranteed 3.5% floor it's probably better than anything you can buy today. Dad bought the policies and then the IRS changed some of the rules which made it much less attractive. It has some cash value left but is on the downhill slope as premiums now exceed returns, and I have much better term policies purchased in my early 30s. I'll probably cash it out soon, I've just been waiting for the kids to get a little older and the 401k to grow a little more. If dad had put the same money in a good mutual fund (say, Vanguard 500 index), it would be worth 10x the cash value of that policy (mutual fund would be worth about 1/2 the death benefit). Even better now if you can match your child's reported earnings and put it in an Roth IRA and have all that growth tax-free. Yes, life insurance is used by corporations etc., but that involves a completely different set of considerations than a child. And I understand the future uninsurability argument, but why spend that money on a less than 1% probability, instead of on an investment that will be useful 100% of the time.
Last edited by Wahoo; 03/08/24 08:56 AM.
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Re: Life insurance for teen
[Re: Joe4majors]
#4097630
03/08/24 09:58 AM
03/08/24 09:58 AM
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Joined: Dec 2004
Posts: 18,859 .
ford150man
Old Mossy Horns
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Old Mossy Horns
Joined: Dec 2004
Posts: 18,859
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I have a $10k policy on each of my three kids but it’s just because I get it as a benefit through my job. As stated above, the only reason for a kid to have a policy is to bury them. No need to have $250k policy. Insurance isn’t there to make you wealthy.
If voting made any difference, they wouldn’t let us do it.-Mark Twain
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Re: Life insurance for teen
[Re: Joe4majors]
#4097638
03/08/24 10:06 AM
03/08/24 10:06 AM
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Joined: Oct 2009
Posts: 5,715 Henry county
coldtrail
12 point
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12 point
Joined: Oct 2009
Posts: 5,715
Henry county
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My father bought a whole life policy on my brothers and I. This was probably 45 to 50 years ago. I guess it was to provide funeral expenses. He assumed the 1000 dollar payout would take care of most of it. If he would have invested the premiums there is no telling g what it would be worth. The way things are going $10,000 in 40 years won't be enough to by a suit for the funeral.
"And the days that I keep my gratitude Higher than my expectations Well, I have really good days" Ray Wylie Hubbard
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Re: Life insurance for teen
[Re: Bulls eye]
#4097799
03/08/24 01:57 PM
03/08/24 01:57 PM
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Joined: Nov 2011
Posts: 21,789 USA
Remington270
Freak of Nature
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Freak of Nature
Joined: Nov 2011
Posts: 21,789
USA
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I put some money in a vanguard account around 15years ago. Haven’t touched it or added anything since. My rate of return for 15 years is over 10%. The amount I put in has quadrupled in 15 years. No whole life insurance policy is going to do that. Correct. Because that’s what THEY are doing with your money. And giving you a 2% return.
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Re: Life insurance for teen
[Re: Joe4majors]
#4098096
03/08/24 07:57 PM
03/08/24 07:57 PM
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Joined: Jul 2005
Posts: 19,095 Chelsea, AL
straycat
Old Mossy Horns
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Old Mossy Horns
Joined: Jul 2005
Posts: 19,095
Chelsea, AL
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A good fund will out perform a permanent insurance policy--absolutely true. Everyone would benefit from this over the long run. It's smart financial planning.
What I also know is that there are permanent insurance policies that are structured in ways that are used as a financial tool that simply isn't possible with investing in a fund. Dump cash in over the first 7-10 years and become your own bank. You borrow from the policy but you still earn on the full amount. Then you repay the policy with interest if you desire. Rinse and repeat. It's a perfectly good tool as a supplement to other diverse investments. 2% returns would suck. I'm more than triple that on what I'm using. But it's specifically tailored for investors and Infinite Banking.
On year 8 of my policy I can stop making required premium payments. 500k policy. So far I've self financed two real estate deals with my own funds (policy funds more accurately). No need for a bank. No 10-12% investor rates plus 2-3 points. Project complete and sold...Return policy loan (any outstanding reduces death benefit) and repeat. It's a good diverse way to use capital while receiving lower but steady growth.
This is not an "all eggs in one basket approach". It's a tool that has great advantages in some situations.
Last edited by straycat; 03/08/24 08:01 PM.
"The grass withers, the flower fades, But the word of our God stands forever." Isaiah 40:8
"Neither the wisest constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt.� Samuel Adams
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Re: Life insurance for teen
[Re: mw2015]
#4098182
03/08/24 09:04 PM
03/08/24 09:04 PM
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Joined: Aug 2018
Posts: 5,276 Georgia and Missouri
Semo
12 point
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12 point
Joined: Aug 2018
Posts: 5,276
Georgia and Missouri
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Life insurance isn’t an investment and the quoted amounts sound high for a child. The one $300 a month quote sounds high like an IUL which I don’t think is an appropriate product for a child. Some grandparents or parents might get a rider for their children or a jumping juvenile policy when they’re really young. Some folks like the Gerber Grow up. I sell insurance for a living Joe4m. You can see my banner ad at the top. First thing to Ask yourself What is the purpose of the life insurance policy? The question is why did the person at church tell you this. As your children grow and get older their needs will change. Maybe they get married and have spouse and children but likely will still be young enough in their 20s or 30s to still get affordable rates. Usually folks buy life insurance to protect a loved one like a spouse and children or for final expenses . Like I said I have seen parents buy a jumping juvenile policy for a child or get a child rider to their own policy when they buy it. Just remember life insurance is not an investment. Some modified whole life and IULs can build some cash value but they’re not investments. I’m not saying don’t get it but ask yourself serious questions as to purpose of getting it. If they’re really young a jumping juvenile policy won’t hurt and they’ll have something in place. Just be careful. I get that you sell insurance. But, I take it that you dont do much estate planning, corporate compensation, or charitable trust work. Life policies can be great investment vehicles under the right situations. Most of the time what makes them the best choice has to do with tax laws both corporate and individual.
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Re: Life insurance for teen
[Re: trlrdrdave]
#4098275
03/09/24 12:21 AM
03/09/24 12:21 AM
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Joined: Oct 2000
Posts: 7,276 Lee County
RCHRR
14 point
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14 point
Joined: Oct 2000
Posts: 7,276
Lee County
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You'd be better off getting just enough to bury them if needed and investing in a mutual fund. Then when they buy a house or get married reevaluate how much they need. No matter what in insurance agent tells you. ^^^THIS^^^
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Re: Life insurance for teen
[Re: Semo]
#4098284
03/09/24 01:41 AM
03/09/24 01:41 AM
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Joined: Aug 2018
Posts: 5,276 Georgia and Missouri
Semo
12 point
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12 point
Joined: Aug 2018
Posts: 5,276
Georgia and Missouri
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Life insurance isn’t an investment and the quoted amounts sound high for a child. The one $300 a month quote sounds high like an IUL which I don’t think is an appropriate product for a child. Some grandparents or parents might get a rider for their children or a jumping juvenile policy when they’re really young. Some folks like the Gerber Grow up. I sell insurance for a living Joe4m. You can see my banner ad at the top. First thing to Ask yourself What is the purpose of the life insurance policy? The question is why did the person at church tell you this. As your children grow and get older their needs will change. Maybe they get married and have spouse and children but likely will still be young enough in their 20s or 30s to still get affordable rates. Usually folks buy life insurance to protect a loved one like a spouse and children or for final expenses . Like I said I have seen parents buy a jumping juvenile policy for a child or get a child rider to their own policy when they buy it. Just remember life insurance is not an investment. Some modified whole life and IULs can build some cash value but they’re not investments. I’m not saying don’t get it but ask yourself serious questions as to purpose of getting it. If they’re really young a jumping juvenile policy won’t hurt and they’ll have something in place. Just be careful. I get that you sell insurance. But, I take it that you dont do much estate planning, corporate compensation, or charitable trust work. Life policies can be great investment vehicles under the right situations. Most of the time what makes them the best choice has to do with tax laws both corporate and individual. I was reading this thread again and that response might have come across as snippy and that wasnt my intention, so I'll add an example. A real example was I had two clients (husband and wife) that were both doctors. We had done about all we could do with qualified plans and they both had nonqualified accounts that would grow to be substantial by retirement age. They both had term policies that were coming due and they were about 40 with kids and wanted some insurance to continue (especially until retirement age). Hartford had a good VUL policiy in those days with limits on fees and great sub accounts. They were able to fund to the policy max and it was a back door to kind of create a (roth like) pool of money that once they were 65 would have a large pool of monies that they could draw on that would allow for tax benefits for funds in retirement. This would balance the ordinary income taxes they would have in retirement if more money was needed during that period. Sure, we could have gone with term and invested the rest, but it wouldnt have grown tax deferred or had the loan provisions that could offset taxes upon withdrawal (if that was what they wanted). And if no extra money was needed later in life the death benefit was substantially more than we could hope to acheive in equities. Just one example of insurance being used for investment purposes. But, I do agree that the original question isnt an investment related one. However, IMO the ULs got a bad rap due to the inflated quotes agents gave to sell them. If funded properly they can be very effective in the right situations. The downside for me was I gave up a lot of comissions because I didnt get paid near as much as I would have with ordinary mutual funds or a fee based equity account.
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Re: Life insurance for teen
[Re: Joe4majors]
#4098455
03/09/24 11:56 AM
03/09/24 11:56 AM
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Joined: Jul 2005
Posts: 19,095 Chelsea, AL
straycat
Old Mossy Horns
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Old Mossy Horns
Joined: Jul 2005
Posts: 19,095
Chelsea, AL
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^^^SEMO, thank you for taking the time to lay out some of the investment tool strategies that are available. You said it far better than I did.
"The grass withers, the flower fades, But the word of our God stands forever." Isaiah 40:8
"Neither the wisest constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt.� Samuel Adams
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