02/27/2021
Life insurance..... the best gift that young parents or new grandparents can choose to give their newborn to teenager!!! Yes, that’s correct, and I am going to explain why based on the material written in Ge**er’s Grow Up plan (pictures attached), from which I’m going to expand with more comments and examples from my own personal policy experience. During that, I am also going to compare Ge**er’s policy to another insurance giant, State Farm. My personal policy is with State Farm, and as we go along you will notice that State Farm has the edge over Ge**er on these policy’s.... in my opinion anyway and you can form your own. Life policies can be extremely confusing to so many people, so I want to help make it make sense because I promise you that first statement is 💯 accurate, and therefore I highly recommend purchasing this for your little one the minute your budget allows for it! Here we go.....
There are for the most part 2 main types of life insurance plans available, with some others that are hybrids or have special features. One type is called “term” life, and it’s name says it all. You sign a policy that lasts for a certain number of years which is its “term”. At the end or expiration, you get zero cash back or value for all that premium you paid, it was cheaper but it’s just money out the window since you did not die. Well guess what, now you’re 10 years older, your health has gotten bad, and every time you renew these policies for the next term they give you medical exams and questionnaires and they get extremely expensive in your old age. If this type policy happens to be all you can afford, then buy it, but only for just the amount you estimate will be needed and no more to reduce the waste of cash that I just explained. Now what you SHOULD be purchasing at the earliest or youngest age possible is a Ge**er plan, also known as the second policy type which is “whole life”. Again, the name says it, you are making/purchasing this policy and committing to it for your lifetime. The premiums are a little higher in the beginning than Term policies, but guess what when you commit to a whole life policy the premium NEVER increases in old age so by that time the $35 a month of mine became like nothing once my career and income advanced. In my early 20s that was harder to afford but i made it work.
Item 1 & 2 - “Buy more coverage at standard adult rates” guaranteed regardless of health. That’s great you can buy more later, but notice it said it will later be at higher, “standard adult rates”. Get the largest policy you can afford up front so your premium is locked in at that low amount, plus the cash value will build faster and larger too. Don’t wait, even if you have to buy a smaller policy, then another small policy 5 years later and then a 3rd in another 5 years, and so on.
Item 3 - Builds Cash Value - This means they have taken your premiums and invested them all through the years to earn income off your money for decades before you die is their hope. So, in return, they give you back part of what they earn on your money and there will be essentially a savings account or cash value in addition to the actual policy amount. Here is one of the justifications to my first statement that this is the best gift ever.... by the time your infant gets to college age, there may be enough cash value in their life policy to borrow from, that the child can buy a dependable car for school and/or work. If it’s not needed at that point then let it keep building because hey by the time they finish college and save to buy ther first home this insurance policy will make a big difference as a down payment for it or to buy furniture. You’ve not only covered them in the event of a tragedy, but now all of a sudden it’s given them a jump start toward some of the biggest life purchases the child is going to face as an adult. Now, the interest rate to borrow a loan against your life insurance cash value is typically a rather low amount regardless of your credit score, and the loan is not subject to having a good credit score either, meaning they won’t turn you down as long as you have the income to pay it back because the money is technically already yours. Imagine losing everything, your credit has gone straight to s**t and you can’t get anyone to approve you for a loan. That’s when your old car bites the dust yet you cannot get a loan to buy a new one from any bank.... well this right here is your answer. Nice, got your attention now huh?!?!
Item 4 - Cash out the policy for its value is not what you ever want to do under any avoidable circumstance because you lose a lot of money and p**f the policy is gone, the insurance company got off the hook easy, and your next policy is gonna jack way up on price. It’s not worth taking that loss. I said up front this by name is a commitment your whole life remember? Don’t ever cash it in unless you have no choice.
Item 5 - The sooner or younger the age when you purchase the policy, the cheaper that monthly premium you have will be. They expect to get that many extra years of investing your money so they give you a break in price for that. For example, my policy was $30 per month for a $50k policy when I bought it at the age of 27 from State Farm. Now, you can insure a child under 4-5 years old for $15-20 per month with State Farm last time I checked about a year ago. That may be hard on you right now but think how cheap that premium will be on them once they are grown and take over the payments. Plus, all those years of cash value will start building up too. Get this, here is one of State Farm’s edges over Ge**er, they have a plan where you pay the life premium until the child is age 18-21 and then all of a sudden the premiums go away and they never pay another cent but the policy covers them for the rest of their life. The policy is paid up in full. This would provide less benefit by not building as much cash up in it, but if you bought 2-3 policies like these that each pay off at 21 that’s a sizable amount of money they are covered with for free until their death. Personally, one policy of each would be my route if it fit my budget. Ok now you should be understanding and thinking just how many ways that cash, or the lack of having to pay anymore premiums, and the locked in cheap premiums for life, is going to save your child and give them that jump start cash boost to get off the ground while young and struggling. This gift is going to give year after year for the rest of their life. Now if they never borrow from the cash value in their policy, then when they die, the beneficiary gets the policy amount, plus they get all that built up cash extra too.
Item 6 - Ge**er policy claims that it doubles at 18, but just go buy a double amount of policy up front at State Farm and you come out better in the end.
Add Ons to the Whole Life Policy - There are 2 different add on features to the policy that I highly recommend, and beyond that the rest are possibly not really worth paying extra. One, if the policy doesn’t already come with a “rider” they call Accidental Death & Dismemberment, then ask if it can be added as a rider as long as it’s not extremely costly this will mean that if the child dies in an accident such as a car crash or plane crash or amusement park malfunction, anything accidental, then the policy pays out for DOUBLE the amount. It also means there are certain cash payouts should the child lose an arm, leg, fingers, etc. I wouldn’t pay more than 25% extra for the AD&D rider, meaning if your premium is $20 a month then only $5 more a month is what i would want to pay for that rider. Second, you want to add a Disability rider to the policy, no question. For 50 cents extra per month, my Disability rider kicks in if I ever become disabled and cannot work..... and it pays the monthly premium on my coverage for the rest of my life so I never lose the policy. These are what I call value added features or add ons, they are focused on protecting you and increase your returns of the money you get for what you have invested in the policy.
Lastly, since the discussion is about life insurance, there are a couple of other life insurance policies that you should watch for and make sure are in force during certain major life events. They are vitally important and can mean the difference between a home or living on the street if say daddy makes the biggest money to pay for your nice home, but he has just died unexpectedly in a car accident. How on Earth are you going to be able to make that huge house payment on your own, now a single mother with limited income? Here is how, and EVERY married couple should have this rider as part of their home mortgage when the papers are signed.... it’s called a “credit life” policy that in the event that either spouse passes away, then that insurance rider to the mortgage pays the house off in full so the living spouse walks free of a house payment. Now, take that little tidbit and here is how my Accountant mind works that makes that policy extremely valuable..... As that mortgage gets paid down to no less than 35-50% of the home’s value, refinance the home using a “cash out refinance” loan back up to 65-75% of the home’s value because that credit life insurance will pay that off, yet you also take that extra cash and invest it at the bank in a certificate of deposit that pays interest to you and protects that money. You keep pulling out and investing the house’s equity over and over keeping that mortgage balance higher knowing it would pay off at that higher balance. Eventually, there will be enough cash built up and reinvested from doing that, that you could pay the house off in cash if you ever needed to but you will see the biggest bucks for your credit life payout.
Haha, see these are things that people like Trump come up with that are not illegal, but it’s definitely slick and how you make your money earn you the most money in return. It takes a lot of discipline and a financial planner in control of your assets for some folks in order to pull something like this off because it’s a detailed plan, but hopefully now you understand exactly which type policies are truly needed and what is mostly just wasting your money. Plus, you are now aware that this small monthly investment could set your little one up for success young in life. I’m betting the majority of you have not thought about this yet, or you didn’t know this was possible using the right life insurance policies the right way. Contact me or comment any questions you may have, or if I can assist you with consulting and advice for your specific situation.
Crista Shirley, CB
