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Give your grandchildren the gift of lifePosted Tuesday, February 10, 2009, at 12:00 PM
When you are trying to choose just the right gift for your grandchildren, you can have a tough time sifting through the newest trends and fads. Last week, it was this pop star, next week, it may be a new cartoon character.
On top of that, you don't want to get something that won't last 10 minutes out of the package. One gift that will last for many years is a life insurance policy. There are many reasons why it can be an excellent gift for your grandchild, including: * Affordability. The younger the child's age, the lower the premiums, * Protection. Illness or injury may affect a child's ability to purchase life insurance coverage later in life. Coverage purchased now will continue to provide protection, even if a child's health changes, provided premiums are paid as required by the policy, and * Financial Security. Life insurance can be the foundation for a strong financial plan. The child may be able to borrow against the accumulated cash value (with interest charged) to pay for future expenses. While loans decrease death benefits and cash surrender values, the proceeds can be used for important expenses such as a college education or the purchase of a home. Giving a gift of life insurance to your grandchild can be one of the most significant things you do during your lifetime. He or she may not understand at the time how important the gift is, but should grow to appreciate it in the future. Take the guesswork out of your gift shopping. Life insurance is a gift that will last a lifetime. Comments Showing comments in chronological order [Show most recent comments first] |
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There are other options though. Life insurance as an investment does not have that high of a return and a life insurance policy does not directly benefit the child but only provides less of a financial burden to other family members upon his death. This is a relatively high opportunity cost when compared to other investments if amount is higher than funeral cost.
If I were choosing a gift that would be more everlasting, I would start a 529 educational account for a grandchild. A good education can provide him with a better paying career that will bring a more secure financial future. The unique thing about a 529 account is that to avoid paying taxes upon withdrawal, one must use the money towards educational expenses. This encourages the child to use it towards a college education and not for a car or other short term want. You can also switch beneficiaries if you have several grandchildren and one gets a full ride scholarship and doesn't need the money.
Once an adult, the individual can cash out small portion of the face value of a life insurance policy, wasting all the premiums you have paid into it. With a 529, you can choose a safer, smaller yielding investment strategy or a more high risk bolder one. With share prices down so low now, it's the perfect time to get good returns by the time a small child is ready for college.
Indiana also has it own 529 that can give the donor a tax break too if I am not mistaken.
I have both insurance policies and 529's and even with economic downturn, there is more cash available for education with the 529. The life insurance policy would only be higher upon death. I personally would only insure my dependents for what it would cost for funeral expenses. Not until they have their own dependents do they need anything more IMHO.
Please lay off John, he is a product of our vastly inferior educational system here in Clay County. Youhave to cut him some slack considering that fact. My parents taught when he was in school and you should just blame them for any shortcomings he might have. 529's are a luxury that 90% of our county has no realistic chance of having. If you are middle class you are sunk when it comes to your kids college expenses. Have them take a loan and then pay off 300$ a month for them until they get a job and then let them take over. Common sense advice instead of advice that only 5-10% of us could even enact. Drive your car a little longer and you can afford it!
rdevil8:
"Consider any individual at any period of his life, and you will always find him preoccupied with fresh plans to increase his comfort."
A quote from Alex De Toqueville. French author who visited America and wrote a book about his impressions of Americans. You might read it for you have forgotten that to aspire to do better is what this country is about. None of us has a guarantee but all of us are expected to strive to make ourselves and others better off.
While you insult your own parents and judge Mr Howe, you lie to readers by telling them that if they aren't in the top 10% of the socioeconomic ladder they cannot make their own decisions. The American middle class is a group of strong individuals that you give no credit. Thankfully many of them have made better choices from seeking out information on how to secure a better future for themselves and their children. whether it is securing a better education for their child so they can be better off or getting insurance so that they will not undergo a sudden loss of income upon one's death, illness, or accident.
While Mr Howe and I may disagree on the best way to invest for that future, either way would be better than giving up and doing nothing and then being unprepared.
...and as for driving my/his car? What in the world has this got to do with anything either of us mentioned? You would do best to stay on topic of planning for the future.