Reply to Is a Whole Life policy for children with a disabled parent a good idea?

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Reply to "Is a Whole Life policy for children with a disabled parent a good idea?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]What is the coverage on the plan? If it's a $1M policy for life--then sure, not a bad investment, assuming the company is likely to be around long-term. But if it's only $200-$300K (as I suspect it is) you are better off investing that money.

You'll pay ~$50K over the life of the policy. At a relatively conservative 5% yield, that would give you $200K+ after 30 years. With more aggressive investments, you might have closer to $1M in that same time period. And if the child lives a normal life to, say, 70, it would grow far more.

It isn't so much about whether the child will need life insurance, but about whether this investment is a reasonable way to get that financial security.[/quote]

Whoops, I misread the premium as $280 a month. So $280 a year is only $4200. How much is the policy for? Is the company a longstanding insurance firm? That's a very low rate for a limited pay policy, so those two pieces of information are important. It might be a reasonable investment if the company is reputable and the payout is at least $100K.[/quote]

The payout is 25k.  It’s a long term reputable company.  It guarantees them the ability to buy more insurance without an exam when they’re older.  So really I’d be buying a policy with minimal coverage to make sure they can have more insurance coverage when tbey have their own children...even if they have seizures as well.[/quote]

Hmm, the guarantee to expand it is interesting. I'd ask more questions about that and be sure it really covers a scenario with pre-existing medical conditions. If so, it might be worth it (as long as you're clear, as you seem to be, that you are not buying an insurance policy, but an option for a future insurance policy). From an investment perspective, $4200 over 15 years for a $25K payout is not a good plan, but that's not the entire story here.[/quote]

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