|Posted on 10 December, 2018 at 16:35||comments (0)|
Parents and Grandparents -
Have you thought about the legacy you will leave for you Children and Grandchildren?
Is leaving a legacy important to you?
I often think about the legacy I will leave behind. I think about how my Children and my future Grandchildren will remember me, and what I would like them to remember me for. I also think about the financial legacy I will leave my family. Not just my children, but my grandchildren, and their children and so on. I would love to be able to impact future generations in a positive way, both personally and financially.
The idea of leaving a legacy comes to mind more often around Christmas, The Season of Giving.
Most gifts we purchase are material and for the immediate, but do we think about the future? Do we think about leaving a lasting gift that will bless not only our children and grandchildren but future generations? I do. If I can, I would love to provide for my children and grandchildren when I’m older and even continue to provide for them when I’ve passed away.
A great proven way to leave a financial legacy – and one that Amy and I personally use - is to give our children / grandchildren the lasting gift of a Dividend Paying Whole Life Insurance Policy.
What Did I Just Say? What Kind of Gift is a Life Insurance Policy? Answer: One of the best possible gifts to give.
Let me explain.
Dividend Paying Whole Life Insurance is a permanent insurance policy, so first things first you’ve insured the next generations. You've protected their income and their future families. That’s a gift in and of itself.
This policy however, is not just a death benefit (which already is a great asset). It also grows cash values every day within the policy which can be used throughout the insureds life. It’s basically a GIC on Steroids (cannot lose value, and guaranteed to grow) that your loved ones can use for education, a down payment on a house, to travel and even to use as tax-free income in retirement. That's right, Tax-Free!
(With Government Debt now at over $664,080,990,000.000 (try saying that 5 times as fast as you can) and Baby Boomers hitting retirement, the words tax-free are becoming more and more important)
This entire policy grows every day. The policy stays in force and grows in value every day. whether the loved one you’ve insured lives until age 45, 85 or 105. When they pass it transfers to their loved ones – a spouse or children, whomever they choose.
You - parent or grandparent - can help the next generations in your family through post-secondary school, buy their first house, travel the world, be prepared financially for retirement, and take care of their future families, all with the gift of a small premium (level premium that doesn’t increase, that can be fully paid in 20 years, and that can be paid monthly or annually) towards a whole life insurance policy.
Think about this: You purchase a small whole life insurance policy on your grandchild when they are 1-year-old. Your children know of the gift you bought for their children. Your grandchild grows up and has a family. Your children buy their new grandchildren a small gift of dividend paying whole life insurance, following in your footsteps. Your own grandchildren use the policy you’ve purchased for them to help fund their retirement and when they pass away their death benefit goes to their kids as an inheritance. Now, their kids use part of that death benefit to purchase a life insurance policy on their grandchildren, and use the rest as they please - opportunity. And the cycle continues. For generations you’ve built a legacy of giving, a legacy of opportunity, and a legacy of family wealth. Years and years after you’ve passed away, you are still impacting your family’s lives. All from one gift! Pretty incredible.
Amy and I are very interested to see how our children will use the life insurance gift we’ve given them and what kind of difference in will make in the lives of them and their future families.
If you’d like to learn more about this gift and how to go about giving this gift to your children and/or grandchildren, we’d love to help. Contact us here.
Merry Christmas and a Happy New Year,
From Fresh Ground Financial.
|Posted on 20 November, 2018 at 16:45||comments (0)|
Financial Risk - Dealing with Debt / Mortgages
Tom and Dick were debating the other day about who was carrying more financial risk.
Dick thinks Tom is carrying more risk because he has $0 of savings, and $0 of debt.
Tom, on the other hand, thinks Dick is carrying more risk because while he has $20,000 of savings, he also has $20,000 of debt.
What do you think? Who is carrying more risk?
Tom - $0 Savings, $0 Debt,
Dick - $20,000 Savings, $20,000 Debt?
We’ll talk about that in a minute.
Organizing Income / Dealing with Debt and Mortgages Workshop
Tuesday, November 27th. 7-9 PM. 875 Gateway Rd. Wpg, MB
Currently, The average Canadian saves only about 4% of their income for the future (for most people that means short term future like a trip or a big expense rather than retirement) and spends 34.5% of their lifetime income on interest payments. Our mortgage is often the biggest interest expense.
In this 2 hour workshop we’ll walk through structuring our income for success and discuss how much of our income should go to our current lifestyle, how much for the future, how much towards our housing costs etc. We’ll also discuss some guidelines on how much house to buy, and an alternative way to pay off your house that could save you thousands in interest and years in payment time.
Finally, we’ll discuss some simple strategies to help pay off debt more quickly.
In short - we’re budgeting well and paying off debt more quickly in this workshop.
Alright, Back to Tom & Dick
While Dick has debt, Tom is actually carrying more risk. If Tom were to lose his job or become disabled or ill, he would be in a very tough position, as he has no money available to him. If Tom ended up in this situation, he would likely be unable to get a loan because the bank would wonder how he is going to pay off the loan, having no job. He will have no way to cover his monthly expenses as he has no money in his accounts and no way to get access to money.
Dick on the other hand has $20,000 of savings in his control, to access and to use if he were to lose his job. He will be able to cover his monthly expenses for a time, giving him some financial security while he tried to get back on his feet.
Why do I share this example with you?
Most Canadians hate the idea of debt, especially big debt like a mortgage. Because of this, they use most of their extra monthly income to pay off their debt. What they may not know however, is that this will likely leave them taking on a lot of risk because the rest of their "financial house" is not in tact, or structured well. They'll often leave themselves under - insured (most Canadians are under - insured), and use those dollars and the dollars that should be directed towards saving for emergencies, saving for opportunities and saving for the future to pay of their debt instead.
While it is important to pay off debt quickly, it should never come at the expense of leaving your household poorly structured financially, and taking on undue risk. Before paying more into debt, we should ensure that we have access to money when we need it, that we are prepared financially for difficulties that come our way such as a death or an illness, and that we are saving for the future - the retirement years come much more quickly than we often expect.
My encouragement for you - whether you have debt or not - is to make sure that you have money that is accessible to you and in your control at all times. With access and control of money, you are ready for any emergencies and opportunities that come your way.
We'll discuss the ideas in this blog in more depth at the November 27th workshop Organizing Income & Dealing with Debt, including paying your house off more quickly while paying less interest.
We send out thoughts and tips like this regularly in our newsletters.
|Posted on 4 October, 2018 at 14:00||comments (0)|
Today’s Topic: Organizing Income.
“Do not save what is left after spending, but spend what is left after saving.” - Warren Buffett
** Financial Strategies To Get Ahead - a one-day seminar on October 20th - is designed to help people protect and growth wealth for themselves, their families and their businesses. Click here for more information and to register. **
Putting money aside on a monthly basis for emergencies and for the future is very important. Doing this puts us in control of our financial situation. If we do not have savings we often borrow when an emergency comes up. Those who do not save are usually indebted to those who do.
One way to ensure that you can save first is to make more than you spend. This allows us to structure our money, and plan for the future much more easily, because it gives us that room to save, and invest, and deal with emergencies along the way. Making more than we spend every month is the first step to wealth building.
Budgeting, and planning your cash flow - having discipline with your dollars - is a great way to ensure that we make more than we spend. Here is a helpful guideline to ensure that we can make more than we spend every month and have plenty of room for saving, for sharing with others, and taking care of our monthly needs.
The Goal (based on net income)
10% or more: For others
10% or more: Savings
30% or less: Housing Costs - includes mortgage payments, house Insurance, property tax.
25% or less: Daily Living - includes entertainment, eating out, hobbies, travel, clothing, gifts, infant needs, pet bills, personal care, etc.
25% or less: Everything Else - includes maintenance, phones, TV, internet, gas, parking, insurances, debt payments, investments.
These percentages are the goal. If you haven’t been saving anything yet, don’t worry too much. The key is to start. Maybe start with 1% until you hardly notice it and then increase it.
|Posted on 9 August, 2018 at 0:40||comments (0)|
One of the Most Effective, Underused and Risk-Free Money Making Strategies that Everyone Should Use.
Today’s blog is all about one of the best strategies for making money. I will warn you however, that this strategy is perceived negatively by some, mostly due to a misunderstanding of the concept. With that said, if this strategy is structured properly, it is - as the title says - one of the most effective, underused and risk-free money making strategies that everyone should use.
For now, we’ll use a few letters to name this strategy - DPWLI. So what makes this DPWLI strategy so great?
1) Guaranteed Growth that actually gives a decent return.
The most frustrating thing about investing is that we generally have to risk our money in the markets if we want a return that keeps up to, or surpasses inflation rates. If we do not want to risk our money, our best option seems to be GIC’s. GIC’s usually give a return somewhere around 2%. Inflation rates are around 3%. With GIC’s, we are losing money value.
The DPWLI strategy works likes a GIC on steroids. It offers - over the long term - an annualized rate of return around 4.5%. Now that may not seem all that high but let me explain something. Most people see the Average Rate of Return on their investment statement. But I said Annualized Rate, and Annualized Rate of Return and Average Rate of Return are quite different. You can expect to need an Average Rate of Return of about 2% higher to have the same amount of money in your account as what an Annualized Rate of Return will give you. If you have money in the markets (ex. RRSP’s in mutual funds or index funds), you would need an average rate of return of about 6.5% to match the 4.5% Annualized Rate of Return that the DPWLI strategy offers. You may be thinking to yourself that 6.5% isn’t all that great. That may be true but it’s already better than the return most people are getting. There’s more to consider however… point 2.
2) It’s all Tax - Free
When the DPWLI strategy is structured properly, all the money you take out to use - now or in retirement – is received tax free. No Taxes! At all!
When you have your money in an RRSP, your retirement income is fully taxed. Taking into consideration the tax implications of this type of investment, you would now need an average rate of return around 8.5% over the investment’s lifetime to have the same amount of money in your account as the annualized tax-free 4.5% rate of return that the DPWLI strategy gives you.
Tax Free Savings Accounts also offer tax-free income, but you are significantly limited to how much you can invest in a TFSA, and you need to find a place to put your TFSA. Most people leave their TFSA at the bank gaining 2% (again, losing value). If you have your TFSA in the markets, you are dealing with the risk of loss.
3) You can use it during your life time and the value keeps growing.
One of the most amazing things about the DPWLI strategy is that you can use the money that has grown using this strategy without losing the value of the investment.
Albert Einstein said “Compounding interest is the 8th wonder of the world. He who understands it, earns it… he who doesn’t, pays it.”
I think most of us understand this statement to some degree. None of us like taking money out of our investments (our RRSP’s, TFSA’s, etc.) because when we do, we are taking away the opportunity for our money to grow on itself. We are depleting the value and potential of our investment. We do not want to do that. This leaves us with two choices to ensure that we have money to deal with emergencies or issues that come up, or for opportunities that arise.
The first option would be to save money in an emergency or savings fund.
The problem with this strategy is that we now have a pool of money that is not working for us. This “emergency” fund is just sitting in an account making 1%, waiting for something to happen.
The second option is to borrow money from the bank.
There are a few problems with this strategy. First, we need to qualify to borrow from the bank. Second, the bank controls the whole arrangement. You’ll have set payments and interest to pay. And finally, plenty of issues arise if something unfortunate happens and you cannot continue your monthly payments, even if only for a short period of time. Your credit score will drop, and you will start paying interest on interest on interest.
With the DPWLI strategy, you are in control. You can use the money that you have gained and the value of your fund does not decrease. It actually continues to grow in value, even if you have used it. The principal of your investment continues to grow interest on interest on interest, increasing the value of your policy and you can use that money for emergencies or opportunities. This strategy relieves you from the need to have an emergency/savings fund, and helps you avoid the bank for loans.
4) The moment you put any money into the DPWLI strategy someone you care about is guaranteed to receive a large sum of money - tax-free.
This strategy has an inheritance - a guaranteed death benefit - attached to it.
The DPWLI strategy allows you to grow money at a decent rate in a guaranteed and safe manner. It allows you to receive all the money gained through its lifetime tax-free in retirement and to use that money in your lifetime – for emergencies and opportunities - without losing any value. And it allows you to give people you care about an inheritance.
DPWLI stands for Dividend Paying Whole Life Insurance. Most people view Life Insurance as an expense, but it doesn’t have to be. When your life insurance policy is structured properly, it is an asset. It is an investment, a TFSA account, an emergency and opportunity fund, a retirement account, a legacy for your family. It’s like a GIC on steroids wrapped in Life Insurance. And it’s all guaranteed whether you live till 40, 70, or 105.
To top it all off, the value of your life insurance policy - the death benefit - increases in value every year too.
Now, you may be thinking “what if I wouldn’t qualify for life insurance?”
You do not personally need to be healthy/insurable to use this strategy.
Or maybe you’re thinking “I’m too old for this, it’ll be too expensive.”
Not true. You can still do this with a very small investment amount.
This truly is one of the most effective, safe, predictable, underused, and all-encompassing money making and family wealthy building strategies available.
Interested? Let’s talk.
There is no charge to meet with us, so it’s probably worth it!
|Posted on 20 June, 2018 at 17:25||comments (0)|
Your Financial House
Part 2: Debt Elimination & Wealth Building
A couple of weeks back we discussed the Strong Foundation to any financial plan - the insurances. Once your insurances are in place, you can start dealing with the other 4 areas of your financial house - debt elimination, wealth building, retirement planning and legacy planning.
Throughout our lives we will focus on some of these areas more than others. In the earlier years of financial planning, when you have young families and are building careers, you’ll typically be dealing more with debt and trying to create wealth, with much less focus on retirement planning and legacy planning. This of course makes sense but keep in mind that the decisions you make with your finances today - even in the areas of debt elimination and wealth building - will impact your retirement and your legacy. Thus, you must make your decisions now, with what you hope for your retirement and legacy in mind.
For many who have debt, getting rid of it is the first priority, causing them to dump much of their extra income into their mortgage or loans. Paying off debt quickly is important but do so without compromising the rest of your financial house. Warren Buffett says, “Do not save what is left after spending, but spend what is left after saving.” Even if you have debt, saving should come first. Saving puts you in a position of strength, as those who do not save are generally indebted to and reliant on the people who do. We’ll discuss savings and wealth building shortly but the first step to getting rid of debt, is to not get into more debt. The best way to avoid more debt is to save first, ensuring you have a surplus every month.
Now that we understand that, let’s discuss some basic strategies to paying off debt most effectively.
The key to dealing with debt is unification. With multiple debts, payments typically end up covering interest cost, with little going to the debt load. Unifying debts at a similar or lower interest rate will see more of those payment dollars going to principal, thus speeding up the progress. There is a great strategy to pay off our houses more quickly, with less interest using the unification strategy.
If unifying your debts is not an option, deal with one debt at a time. Choose one loan to push most of your payment dollars into and pay the minimums on the rest. Once the first loan has been paid, take those dollars, and push them into your next loan.
As mentioned earlier, saving first is the first step to wealth building. If there is no surplus at the end of every month, it is impossible to build wealth. Saving also gives us access to money in case of an emergency or opportunity. Having access to money allows for more opportunities to present themselves, creating the ability to build more wealth. A good goal is to save 10% of net income. And the earlier we start the better, as that money has more time to work for us. If you currently aren’t saving, the best thing to do is to start. Begin with 1% or 2%. As that becomes a habit and manageable, increase it. Slowly progress towards the goal and build wealth.
Many people will take what little savings they have and throw that money into the market, using RRSP’s and putting them into mutual funds. While this can work, it may not be the best option. The market is volatile, constantly going up and down. If you have money you’re willing to lose, putting it into the market is just fine, but safe, consistent, guaranteed strategies are what to look for with your early savings. Growing your savings consistently and safely is better than losing what little you have.
For more information on the topics discussed today, feel free to contact us for a free meeting, or sign up for Session 2 and/or 3 of our summer education series “Financial Planning for Young Families.” You can find out more and register for the sessions under the Financial Education tab.
Next Blog we’ll discuss some of the things we need to think about now - in regard to building wealth, saving, and investing - that will have an impact on retirement and legacy planning.
|Posted on 25 May, 2018 at 11:00||comments (0)|
Liz Frazier Peck
May 15, 2018
Think back to the last time you and your honey talked about money? I’m going to guess that it wasn’t a positive experience. That’s because most of our money conversations are reactive; they’re based around bills, budgets, overspending or other issues that pop up. Rarely do couples have positive discussions about their dreams, values and feelings around money. Talking about money with your spouse is critical not only to your future planning but also to the strength of your marriage. Marriage.com lists money as the No. 2 reason for divorce among couples (only behind infidelity). And it’s easy to see why. Money touches everything. If you and your spouse don’t have positive communication around money and support each other’s values, it can lead to constant bickering, fighting and worse.
The good news is if you’re reading this article, you want to improve your communication with your partner. Congrats. Below are four tips to having positive and open money discussions as a couple.
Set a “money date”:
As the very first step, Megan Lathrop, co-creator of Capital One’s Money Coaching Program, recommends setting a money date with your partner. Don’t worry, this isn’t what you’re thinking; we’re not asking you to bring your budget spreadsheet to review over a romantic dinner. The focus of this date is to have an open conversation about your relationships around money. Don’t even set an outcome or goal, just talk. Make sure you’re in a supportive and connecting environment, such as a hike or over wine (wine always helps). This begins to build a foundation of trust and understanding as you embark on future conversations.
Discuss your values around money:
In Lathrop’s workshops, she encourages couples to list their top five values. It doesn’t need to be about money, just whatever’s important to them. From there, compare your lists and identify your similarities and differences. This can be eye-opening to why you may have issues with your spouse around money. Lathrop states that typically what comes out of her workshops is the realization that the couple is not arguing about money, but about values. For example, your spouse may list adventure as a value, while you may list stability. After digging deeper you may realize that this is why he spends so much money on travel, and why you are always buying pieces for the home. The beauty of this conversation is if you make the discussion around values, both partners typically step in and want to support each other. This type of larger structured conversation is non threatening and positive.
Plan for your future:
This seems obvious enough, but according to Capital One’s Financial Freedom survey, one-third of couples never talk about their retirement plans with each other. If you don’t discuss your hopes for retirement then you end up making assumptions about what the other wants. Maybe your husband wants to garden with you ten hours a day like you planned. Maybe he doesn’t. The only way you’ll know is by asking him. Most importantly, having open conversations about your future allows you to plan for it, rather than just letting your future happen by default.
Turning triggers around:
We are all human and we all have our triggers. You know how it goes. You intend on just having a quick talk about the budget, and within five minutes both of you have your arms crossed and are glaring a hole through the other. What’s the best way to avoid these trigger flare ups, according to Lathrop? Slow down. “If one person is triggered, how they respond naturally can trigger the other person. Then we have two triggered people.” Think of it as the stop, drop and roll fire safety method. When you feel your blood heating, take a pause. Acknowledge how you’re feeling and take a break from each other to reflect. Then come back together to discuss when you’ve settled down.
This article was written by Liz Frazier Peck from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.
|Posted on 16 April, 2018 at 15:20||comments (0)|
I recently read an article about a survey that examined the financial situation of seniors in the U.S. The article opened with this line: "When it comes to building a comfortable retirement, proper preparation is key. But as a new survey suggests, people tend to set aside too little — and realize their mistakes too late.
Below you can read the rest of the article which offers insight into why most American seniors are not set up to have a comfortable retirement and a few things that we can learn from their mistakes to increase our chances at a lifestyle in retirement that we feel comfortable with. Below the article, I'll also offer some insights as to when, how, and where to save your money.
"In its latest poll of 1,000 senior citizens aged 65 or older, US-based student loan platform LendEDU examined the financial situation of older Americans. Among the respondents, 55% said they haven’t saved enough for retirement, 27% felt that they have, and 18% said they weren’t sure."
The survey also asked respondents to name some financial decisions from their 20s that they regret today. Not saving enough for retirement was the biggest mistake for a plurality of respondents (21%), followed by spending too much on non-essentials (17%), not investing their money (12%), and incurring too much debt (10%).
“I put off starting to save for retirement … until I was a bit over 31 years old,” Timothy Wiedman, a senior and professor at Doane University, told LendEDU. “I justified this by telling myself that I could always "catch up" later on my long-term financial plans after establishing a solid career and seeing my income increase. But the earning power of compound interest is based on time, so an initial delay can have severe consequences.”
One question asked what seniors know or understand about personal finance today that they did not at 25 years old. The top answers included “how to live within my means” (29%), “how to budget” (26%), “how to save for retirement” (16%), and “how consumer credit works” (15%).
Because of their lack of retirement savings, many respondents in the poll said they were critically dependent on social security (69.1%) as well as life insurance (46.9%)."
Now while this is an American survey, I would suggest that we as Canadians are in a similar situation. Currently, the average debt for Canadian seniors is around $15,000 (not including mortgages), 30% of retirees report growing debt, and government data shows that the number of Canadians working past the age of 65 continues to rise.
Here are a few thoughts for everyone - whether you are 20 or 50 - that can help you be better prepared for retirement.
1) Start Saving Now - 55% of the survey respondants said they had not saved enough for retirement. Start saving. The earlier you start saving for retirement the better. As mentioned in the article "The earning power of compound interest is based on time, so an initial delay can have severe consequesnces." The more time you give your money to work, the more it will grow.
2) Pay Yourself First. Try to save 10%. The more you save, the more prepared you will be. Warren Buffet said "Do not save what is left after spending, but spend what is left after saving." Paying yourself first is key. Make saving money for yourself your first priority. You'll thank yourself later. Warren Buffett also said "If you cannot control your emotions, you cannot control your money." Take control of your emotional spending (a coffee here, a burger there, whatever it may be) and make saving for yourself a discipline.
3) Grow your money in places that offer Tax Free Retirement Income as much as possible. Many people love the idea of saving on taxes now by putting money into RRSP's, but you are actually just deferring your tax bill. If you plan to have a similar or better lifestyle in retirement as you have now, and all your retirement income is taxable, you could pay all the taxes you "saved/deferred" back to the government in only a few years. And in retirement you'll likely no longer have all the other deductions that you do now. Research has proven over and over again that people who have at least a portion of their retirement income coming to them guaranteed and tax free are happier and live longer.
It can be difficult to think about retirement in our younger years (20s to 50's) as we've got other things to worry about like buying a house, raising kids, building our business, and enjoying what we have. These are all valid, but I would bet the last thing we'd like to do is take a pay cut come retirement. I think most of us would rather continue in retirement with a similar or better lifestyle to the one we had during our working years.
If you'd like to chat about some good strategies to prepare well for your future years, we'd be glad to help.
|Posted on 20 October, 2017 at 16:20||comments (0)|
Hi, It’s Brendan here.
My wife Amy and I have two young children. Our son Wyatt is nearly three years old and our daughter Oakleigh is 10 months old. We purchased a life insurance policy on Wyatt just before he turned one year old and will be purchasing the same type of policy on Oakleigh in the next few weeks.
Lots of people wonder why we would decide to purchase a life insurance policy on our children when they are so young. Aftrer all, it kind of seems like a waste of our money. Those thoughts are fair, and at first glance I'm sure it does seem a bit strange to insure someone so young, but I believe there are many good reasons to insure your children as early as you can, and you can read them below:
1) They will be insured for Life
When we purchasea Life insurance on our kids, we purchase a permanent life insurance policy on them. This means that the policy lasts forever and the death benefit is guaranteed to be paid out. With childhood cancer and other childhood illnesses constantly increasing, no matter what might happen, Wyatt and Oakleigh will be insured for life. This protects them from the risk of every becoming uninsurable, prior to having a life insurance policy.
Because they are insured for life, the beneficiaries named on the policy receive the full death benefit no matter what age they pass away, whether it be at age 23, 50, or 95. This means that buying insurance on our children is also protecting and supporting their future families.
2) The cheapest Insurance they will ever get
The younger you insure your children, the cheaper it will be. Insurance will not be cheaper for anyone tomorrow because tomorrow everyone is one day closer to passing away. This cost only increases with age.
Buying Life Insurance on really young children is a cheap way to protect them for life and to ensure that when they have families of their own, they will be protected and taken care of financially. This is especially important when they still working and providing for their family.
3) You can buy an insurance policy that’s worth only a little, but it can grow to be a worth a lot.
if you structure your policy properly, the value of their life insurance will grow every year.
We'll use an example of a properly structured policy with a $35/m premium, that has a starting death benefit value of $27,000, on a child who has not yet turned the age of 1. If you continue to pay your premiums every month using a properly structured Life Insurance policy, by the time your child is 20 years old their death beneifit could be worth $90,000 and by the time they reach 60 years of age, their death benefit could be worth over $300,000.
Another advantage here is that for only an extra few dollars you can purchase a rider that allows your child to increase the value of their death benefit up to 5 times, to a maximum of $500,000 during their adult years. This means that despite their health, they can increase the value of their life insurance policy at the price of someone who is healthy. I think that is so awesome!
4) My kids can use their policy in their life time – to pay for education, travel, etc.
When structured properly, the insurance company guarantees that the policy my children have will pay a death benefit and that cash values will grow inside their policy that they can use during their lifetime. These Cash values can be used to pay for their university education, to purchase a car, to travel the world, whatever they want. To discuss this idea in detail could get confusing but in its basic form, it acts like a savings account that they have access to throughout their life.
5) I can transfer the policy to my children any time after they reach the age of maturity.
Let’s say in 20 years’ time I decide that my children are responsible enough to take care of thei policy or I’ve just gotten tired of paying the premiums, I can transfer the Life Insurance policy over to them at no charge, giving them full control of the policy and leaving them to pay the premiums. Because they have full control they can choose their own beneficiary and when they use their Cash Values.
As mentioned above, I believe there are many advantages to insuring your children as early as you can. There are definitely more than the 5 good reasons I mentioned in this write up. I didn’t even touch on the tax advantages, the interest savings, or the opportunities a properly structured life insurance policy can offer in regards to retirement income.
If you would like more information on insuring your children or if you want to apply to do so, we can help!
We can even help set these up on adults too, as many of the same advantages are still available in adulthood.
Brendan Peters: [email protected] or 204.996.9271
Merv Peters: [email protected] or 204.415.9074