Mail offers for children’s life insurance are second rate because the benefit amount will always be the same. A $10,000 policy will be $10,000 in 10, 20, 50 or 90 years. That’s called a level death benefit.
Get whole life insurance with an increasing benefit, where dividends increase the death benefit over time.
#1 Whole Life – Penn Mutual
Penn Mutual is a “par” or participating whole life policy that pays dividends and the face amount and death benefit will increase over time.
Penn Mutual’s “Guaranteed Whole Life II” product has a guaranteed purchase option rider allows increased purchase additional insurance without evidence of insurability on policy anniversaries nearest the attained ages of: 22, 25, 28, 31, 34, 37, 40, 43, and 46; or 90 days following marriage, childbirth, or legal adoption by the insured of a child less than age 18.
NOT recommended: Avoid whole life offers that come in the mail. These are “non par” or not participating whole life policies with no dividends. The face amount is level meaning the face amount will already remains the same. A $25,000 “non par” policy will always have a $25,000 death benefit.
Term Rider: For about $5 extra a month, your children can be included on your term life policy until they are adults. Up to $10,000 of coverage is about par for the course, though some go to $25,000. Coverage length varies by the companies, up to ages 19 to 25 is typical. If your getting competing quotes, make sure you check those details. Some companies allow you to add this rider even well after you’ve taken your policy out.
Indexed Universal Life
For maximum funding life insurance on a child for college or to establish a high cash value policy for other goals, I have found that whole life is overall a superior product, though Indexed Universal Life has its merit.
Here are some basic pros and cons for Whole Life and Indexed UL’s
Indexed Universal Life
Pros: premium flexibility, higher upside potential (subject to cap), index options
Cons: limited death benefit guarantee, can lapse
Whole Life
Pros: Dividends, guaranteed cash value, paid-up insurance, lifetime death benefit guarantee, dividend options
Cons: less premium flexibility
Carriers and Products – Whole Life:
MassMutual: “Whole Life Legacy 100”
participating (dividends); issue ages: 0 to age 90; minimum face amount $25,000
Penn Mutual: “Guaranteed Whole Life II”
participating (dividends); issue ages: 15 days to age 85; minimum face amount $50,000
Please contact me for a quote
Case Study (12/2023)
Female age 3
recommendation:
Penn Mutual “Guaranteed Whole Life II” with either or both:
Guaranteed Purchase Option Rider (GPO)
Enhanced Permanent Paid-Up Additions Rider (EPPUA)
$39.92 monthly premium ($452.00 annual) $100,000 increasing death benefit participating (par) whole life guaranteed, purchase option rider (GPO) $100,000; non guaranteed year 20: dividend 166, $9,597 cash value, $104,846 death benefit
$226.00 annual premium $50,000 increasing death benefit par whole life, guaranteed purchase option (GPO) rider $50,000
Enhanced Permanent Paid-Up Additions Rider (EPPUA) $25 annual minimum, $609.76 annual maximum, non-MEC limit approximately $175 annual. EPPUA premium flexibility can readily avoid MEC in amounts from $175 to $609.76. GPO rider not really necessary at higher EPPUA amounts since death benefit increases even on the guaranteed side. EPPUA great flexibility with its rolling 5 year minimum premium provision.