Whole Life Insurance for Kids
A Lifetime Gift

Protect their good health

It’s something we all take for granted until it’s too late….being healthy. Insuring your children now, while they’re in good health, not only protects them now, but most highly rated insurance companies, such as The Guardian Life Insurance Company, offer whole life insurance with options to purchase substantially more life insurance at later dates in their life when they, most likely, will need more permanent life insurance, without having to prove medical insurability…what are called Guaranteed Insurability Riders. Additional premium is required for this rider. Typical ‘option dates’ include marriage, birth or adoption of a child, and periodically from age 21 through age 40. As a typical example, purchasing $50,000 whole life insurance on your children now, most quality insurance companies including Guardian will allow that child to increase that policy when he or she marries to a total of $250,000 or more of whole life insurance!

Accumulate tax deferred funds to help pay for college

When a child is insured with whole life insurance, the internal costs of policies are lower primarily because the insured, the child, is young. This allows for greater cash value growth that can be used for any type of college expenses. Presently, over the long term (i.e. 15 years plus), cash values grow inside the policy on a tax deferred basis to approximately 5%!* In fact, if structured properly via loans and withdrawals**, the life insurance policy allows for tax free distribution of the entire surrender value.

Tax deferred cash value accumulation and tax advantaged distributions for anything

There are no restrictions on how the cash value growth can be used. It may be used to help purchase a new automobile, place a down payment on a home, or pay off credit cards. It may be used to pay for anything with no questions asked.

Protect against the unthinkable

It’s one of the most difficult topics to discuss with clients…the potential death of a child. Unfortunately, it may be a reality. The death of a child is the most emotionally painful time in a parent’s life. While eliminating the financial burden of burying your child won’t diminish the pain, at least that burden won’t add to it either.

* Dividends are not guaranteed and are declared annually by the insurance company's board of directors.

**Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above what is paid into the policy may cause ordinary income taxes to be owed on the gain portion of the policy. If the policy lapses, any withdrawals or loans which are considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are distributed like withdrawals. All withdrawals are distributed as gain first and subject to ordinary income taxes. If the insured is under 59 1/2 , the gain portion of the withdrawal is subject to a 10% tax penalty.




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