Updated: Jun 11
How to create a legacy for your children and grandchildren using life insurance.
Life insurance is a versatile financial product and offers more benefits than people know. When people think of life insurance they think of something that's only for when you die. But, did you know you can use the money while you're alive and in many cases not have to pay it back? It can also be used so you can become your own infinite bank.
See below for different benefits of life insurance and why you should consider getting a policy for your children.
Tip #1 - Leave a legacy without having to die first!
I know what you're thinking...I need to die first to leave a life insurance death benefit.
When parents think of leaving a legacy for their children they may think of mutual funds or stocks. But, did you know that you can use life insurance while you're alive? This post isn't about leaving a legacy for your children only after you die, which is definitely a major aspect of life insurance. You can open permanent life insurance products for your children so they have income to pass down to their children after they pass, but also money they can use while they're alive in case of illness or disability.
Tip #2 - Use Life Insurance Money for Major Purchases
In tip 1 I mentioned how you can use life insurance in case of illness or disability. One of the major reasons families face bankruptcy is because of medical bills so having a product that can help is important. Have you heard of cash value?
You can buy a permanent policy for your children that grows cash value. That's money they can use to buy a house, college, or maybe to start a business. Cash value is also money that doesn't necessarily need to be paid back. There's also no risk involved because you can't lose principal or gains. When parents or grandparents think of buying a financial product for their grandchildren's college, they may think of a Gerber plan like 529. It's great, but what if your children don't go to college? The Gerber plan has limitations. Your cash value life insurance can be used for whatever you want.
"Cash value is also money that doesn't necessarily need to be paid back."
Tip #3 - Create a Legacy for Your Grandchildren
Imagine buying a million dollar policy for your children that they keep for the rest of their lives. Let's say they have children themselves then your children pass away of old age and they leave the death benefit behind for their children. Now, your single policy that you bought for your children was passed down to your grandchildren.
Tip #4 - The Younger the Children the Best Time to Buy
Life insurance is cheaper the younger you are and the healthier you are so the best time to buy life insurance is when your baby is young. Most carriers won't allow you to buy a policy for a child until he or she is 15 days old. A million dollar policy for a baby will be heaps cheaper than someone who is 30 or 40. In some tragic cases, children have had leukemia or other illnesses that can really set a family back. Protecting everyone in your family is something important and something you should really consider.