One of the best ways to protect and provide for the next generation is by creating a solid financial footing from the beginning.
When it comes to purchasing life insurance, many of us tend to delay and deflect. Let’s face it, who wants to talk about the possibility of death? Not only can it be a somewhat morbid topic of conversation, but it also may seem premature to even think about, especially if you’re young, fit, and healthy – or even just one of those three!
However, it’s very important that we understand that tomorrow isn’t promised; we cannot control when our time will come. Nevertheless, the choices we make today, can give us some control over the outcome of tomorrow – not just for ourselves, but for those that come after us.
One way to plan for the future is to look at producing generational wealth, (i.e., to pass financial assets from one generation of a family to another). One of the best ways to protect and provide for the next generation is by creating a solid financial footing from the beginning. When you purchase a life insurance policy for your child, you’re accomplishing just that; it’s a simple yet effective means to produce generational wealth.
What Age Should a Person Be When They Buy Life Insurance?
There’s no correct age to begin a life insurance policy. However, there are huge benefits in purchasing life insurance policies for our children; age and health play a significant role in premium payments. When you open a policy for an infant or child while they’re young and healthy, their premiums will remain lower than average throughout the duration of the policy. Once the premium payments come to an end, the policy may still live on accumulating cash value, depending on the type of policy you purchase.
What Does Accumulating Cash Value Mean for My Child and I?
An accumulation of cash value simply gives you more. More in a possible time of need. You, as the policy owner, can access the accumulated cash value in your policy through direct withdrawals or policy loans. What’s more, you also have an additional non-guaranteed portion called dividends, which provide even more value and cash accumulation. With this unique opportunity, you really get the most out of your plan.
Later, when your child comes of age, the accumulated cash value of a permanent life insurance policy can help with things like:
- Paying for their education
- Helping them buy their first car
- Putting together a down payment for their first home
- Funding a gap year before college or university so they can travel the world
- Helping them start a business
And, if they don’t end up using their policy’s cash value for any of those goals, they can use it even later in life to:
- Supplement their retirement income
- Help pay for health care expenses that aren’t covered by health insurance
- Cover their policy premiums
- Help their own children with their financial goals
As you can imagine, there are many reasons to consider life insurance. Having proper knowledge on how a policy works will help you determine the value in getting life insurance for your children, which makes it an easier decision to take the first steps toward producing generational wealth for your family.