How Buying a Whole Life Policy for Your Child Can Build an Asset
These days, parents are open to any savings option that contributes to their child’s future. Daycare is expensive, tuition is expensive, and preparing your child for life in the real world is expensive. In Canada, there seems to be limited options when it comes to investing in our children’s future. We have all heard of RESP’s as an investment option, but there is another an easy and effective way to save for their future called a whole life policy. A whole life policy allows you to grow an asset and pay it off in 20 years, so that when your children are ready to start their life – they have a financial kickstart!
What is Whole Life Policy?
A whole life policy is a type of life insurance that does not have an end date like term policies do. Instead, it covers your entire lifespan. One differentiator here is that there are cash values – the policy grows over time and includes a death benefit. The death benefit is given when the holder of the policy passes away. Their designated beneficiary receives a payout from the insurance company.
How Does a Whole Life Policy Benefit Your Child?
There are a handful of reasons whole life policies are beneficial to your children. First, it ensures that they are able to get their own insurance later in life. Since this policy is purchased while they are young (and healthy), they likely don’t have any medical conditions that would prevent them from getting insured. Later in life when they might develop a condition, this policy from when they were a child could still be in place to protect them.
Secondly, the cash value of the policy can be used at any point. If your child requires funds for school tuition, to start a business, to get married, etc., they can access the cash value to pay for it. Because of this feature, many parents use whole life policies as a savings account for their child. Also, there’s an annual dividend that gets paid to your child which can assist with whatever bills or expenses they may have.
How Does it Work?
A whole life policy is an investment in your child’s future. It can be started by the parents, grandparents, aunts or uncles, and guardians. Once the child turns 18, the owner of the policy can turn the account over to them at any time.
Here is how it works:
- Set up an account with MiLife Insurance; you will need your child’s social security number.
- Pay your monthly premiums. These payments contribute to the pooled fund which pays your child’s annual dividends and provides the tax-free cash value.
- When your child is 18 or older, they can access the cash value and you can guide them on how to use it.
- Some choose to reinvest this money or keep it in the policy, allowing it to grow into an asset.
Ready to get started? Contact us to set up your account and start your saving!