Juvenile life insurance is permanent life insurance that insures the life of a minor. It is a financial planning tool that provides a tax advantaged savings vehicle with potential for a lifetime of benefits.
Juvenile life insurance should not be confused with child life insurance, which is usually purchased to protect a family against the sudden and unexpected costs of a funeral and burial with much lower face values.
Over the years I’ve come to realize that juvenile life insurance is one of the most misunderstood financial products in the market today. As advisors, most of us are familiar with it, but very few of us take the time to talk to our clients about it. Why is that? As parents, most of us have heard about it or noticed the ads on TV, but how many of us really understand it?
One of the biggest obstacles to having an informed conversation with an advisor about insuring our children is the uncomfortable feeling it gives us in the pit of our stomach when we think about the mortality of our little bundle of joy. Thinking of our child in financial terms just seems wrong.
Unfortunately, for many of us, it’s this feeling that prevents us from considering an investment that could greatly improve our child’s financial future as an adult.
As a financial advisor and father of 2 little girls, I can relate to both sides of the issue. I have invested in juvenile policies for my children. However, I didn’t do it for my benefit. I did it for theirs.
I’m 35 years old and am the primary breadwinner for my family. I have a mortgage, a lovely wife, and 2 little bundles of joy. Unfortunately, I also have very little personal life insurance to provide for them if something were to happen to me.
I became “uninsurable” at the age of 22 due to health reasons. At the time I was single, had no wife, no mortgage and no kids. As a single 22-year old, it didn’t seem like a big deal. Now, at 38, it is a big deal.
So what does my story have to do with Juvenile insurance?
Had my parents insured me as a child, before I developed health problems, I would have the coverage in place that I now need to provide for my family. Most juvenile policies come with the right to purchase large amounts of insurance as adults regardless of your state of health, occupation, or lifestyle habits. A typical policy can be purchased on a child and be fully paid for by the time they reach adulthood. Moreover, most policies will continue to grow in value over the child’s life. They can borrow against it, surrender it for the cash value, or keep it until retirement and use it as an income.
For example: A $100,000 policy on a 2-year old child can be fully paid for by the time the child reaches age 22, and be worth as much as $222,000 at that time. If the child keeps it, by the time they reach age 65 it could be worth as much as $1.1 million dollars or more, and have a cash value of over $500,000. Not bad, considering that child’s parents would have invested less than $30,000 into it over a 20 year period. Some policies can even be as little as $25 a month!
Come in for a chat and see how we can help secure this advantage for you.