polarbear99
New Member
- 13
What's the best company with a basic IUL for a healthy child 12 and under?
IUL for Children
- Thread starter polarbear99
- Start date
- 2,492
Silly Question Im sure - but Why would a healthy 12 year old want an Indexed Universal Life Insurance policy?
- 5,260
2 possibilities in my mind, but with the caveat that parents better be fully protected themselves, have their emergency fund & saving tons for their own retirement in 401k/Roth/their own IUL/College 529
If all of the above is true, I find 2 scenarios where it might work. $250k face example, but can be lower face amounts depending on carrier offerings:
1. Low cost no lapse guarantee IUL with guaranteed insurability rider to guarantee their insurability. Basically a no lapse UL or IUL is forever term insruance. The GIR rider many times allows the child to increase their face amount every 3-5 years from the time they are 25 to 45 even if uninsurable. IE: could buy $250k of coverage for less than $50 per month & guaranteed to age 120.
2. If parents have the resources & high income/high net worth, they can buy an Accumulation focused IUL with the lowest minimum face amount & the maximize overfunding every year to keep it below the IRS MEC rules. That policy could eventually have hundreds of thousands of dollars of cash value, if not millions to be there if needed for home purchase, supplement retirement, etc. IE: $250k face amount will legally fit $7,000 per year into it. Projects to have $3-4M at projected crediting & current costs of insurance.
Last edited:
- 11,012
Imo, WL works much better for children.
That ever increasing COI on IUL can really impact a kids policy because its such a long time horizon.
You also get into max DB issues with IUL on kids. Most carriers limit kids to 50% of a parents DB. Normally, IUL has a higher DB than WL does. That can create issues with getting the DB approved if its higher than 50% of parents DB.
You can easily solve that issue by using WL. Especially pivoting to a 10pay or 15pay or 20pay WL.
That ever increasing COI on IUL can really impact a kids policy because its such a long time horizon.
You also get into max DB issues with IUL on kids. Most carriers limit kids to 50% of a parents DB. Normally, IUL has a higher DB than WL does. That can create issues with getting the DB approved if its higher than 50% of parents DB.
You can easily solve that issue by using WL. Especially pivoting to a 10pay or 15pay or 20pay WL.
- 6,025
Agree! Fund a simple plan, then look for a set aside investment... this leaves the parents with additional options as opposed to locked in long term commitment.
IMHO... or maybe not so H but mostly right.
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