Francine Dick, CFP, RIS, EPC’s Post

Investing in Tomorrow: The Benefits of Whole Life Insurance for Children Two and a half years ago I became a grandmother. My grandson was followed 18 months later by my granddaughter. Any grandparent can tell you what a joy it is to spend time with these adorable little people. The most delightful part is that I get to send them home with their parents after an exhausting day. Naturally, I helped their parents set up an RESP to which they and other family members contribute. I wanted to do more, so I set up whole life insurance policies for them. That may sound morbid but the benefit is long term. Let’s look at my granddaughter. I purchased $50,000 of whole life insurance with paid up additions, with the premiums payable for only 10 years. The monthly premium is $102.44 so over 10 years I will pay $12,293. After 10 years the cash value is $6,676, which doesn’t seem like a very good return. The insurance has risen to $79,128 so that’s something. At age 20, in university, she needs some funds. The cash value has now grown to $16,625 which she can access either through a loan or cashing in the policy. But let’s say I’m still around and convince her not to touch the policy. She graduates, works and marries. At age 30 the cash value has grown to $33,638 and the insurance is now worth $193,459. She keeps the policy and by the time she retires at 65, the cash value of the policy is $277,079 and the insurance is $537,948. She could borrow against the cash value to supplement retirement income or just leave it for now. And let’s say she lives a long life. At her death at 95 the insurance benefit is $1,333,825. What a legacy she can leave to children or grandchildren or charities. All because her grandma took out a policy and paid $12,293. This scenario is just an example and the dividend rate will affect the current value. There are ways to pay, ways to use the dividend option and much more. But the principle of providing a long-term financial benefit is solid. If you’re looking to do something for your grandchildren, or your children, consider a whole life insurance policy. Ultimately, it’s a conservative, steady way to lay a concrete financial foundation—one that will quietly grow alongside them for the rest of their life. #lifeinsurance #insuranceforchildren #financialplanning