Which insurance is better for my kids?

Question

Accidental Insurance vs. Whole Life Insurance I got them accident insurane 20K each with cash value for their future, then whole life insurance papers came in the mail for 30K should I cancel the 20K for the 30K they're almost the same price a month.

Answer 1

Your better off investing in other products for your children. Try setting them up with a mutual fund where you pay a small amount per month usually $50 to $125 per month. You will have money go to your kids. I am not a financial planner, but have worked in the mutual fund industry and set this up for my daughter. You can set up a UGMA or UTMA (Unified Gift to Minor Account/Unified Transfer Minor Account) What it means is that you are the trustee and then the account transfers to them when they turn the adult legal age which now is 18. That way you are not taxed when they start taking money out of the account.

Whole life/Universal life policies do not pay much and has insurance connected with it. The first 3-5 years goes to paying the commission of the agent. Get term insurance instead (a small amount $5-$6000), a good health insurance policy, and start setting up a mutual fund account for savings for your kids futures.

Answer 2

I will suggest Citibank, as it offers great schemes and very good service. Check this site for more information. https://www.citibank.com.sg/SGGCB/APPS/p...  

Answer 3

Don't let DM tell yo whether you need insurance.  That's your decision not his/hers.

You usually can't buy term insurance for kids and accidental death is ridiculous coverage (generally speaking) because what if you need the coverage and it wasn't an accident.  You might be better off buying a policy for yourself and adding a child rider which might cost $30/month to cover all of your children for $5-$10k.

http://www.InsurancePIckle.com/life-insu...

Answer 4

They're both not such a good deal.

What's the GOAL of the policy?  Either way, the amount of money you've selected won't go very far!

I don't insure my kids.

Answer 5

Neither are good. Here's why: Accidental Life insurance only pays if the insured (your kids) will die from bodily injured. With sophisticated medical technology and medical advancements in America, the chance of a child dying from bodily injury is almost impossible. Plus, its very rare that any accidental life insurance policies pay their death claims because the insurance company will have its own lawyers and medical examiners to prove that the insured did not die from bodily injury, but from some other causes.

With Whole Life insurance, your premiums are paying for two parts: the insurance and the cash value. Premiums remain level until a certain age (usually around the age of 95 to 100). If your child lives to that age, the insurance company will cancel the life policy and pay the cash value to your child ($30k of it). As you can probably see, the cash value has a low rate of return. It would take over 80-90 years (I don't know how old your children are) for the cash value to build $30k. If your child ever wanted to withdraw money from the cash value, he has to borrow it and pay loan interest on it. That doesn't sound right, does it? The cash value is suppose to be your money (or your child's money), correct? Not in life insurance. The cash value belongs to the insurance company. God forbids your child dies someday, the insurance company will pay the face amount of the policy, but keeps the cash value to themselves.

Anyway, you should seriously think about your financial plan. You should put life insurance on yourself first because your kids are dependent on your income. God forbids something happen to you, how would the family survive financially? So you want to make sure you have adequate coverage as well. Financial experts say you should have coverage of 8-12 times of your annual gross income. If you make $30,000 year, you should have about $300,000 of coverage so that your family is protected from financial loss for the next few years in case you die.

If you have a spouse, you want to add that person on to your policy as a spouse rider. Why? The rate per 1000 coverage is lower when you combine both husband and wife in a single life insurance policy. Plus, you avoid paying more than 1 policy fee. If you still want life insurance on your children, add a child rider to your policy. That way all your children are covered.

I recommend that you get term insurance (at least a 20 year term policy and at most, 30 year term). It cost less than whole life and it doesn't build cash value. So it lets you control where you want to save your money (at a bank, mutual funds, retirement plans, college plans, CDs, money markets, etc).

If the company can't do all this for you, find another company. Its your money and there's no reason why you should pay lots of money for insurance.

If you are looking to put your kids in college, check out the Coverdell Education Savings Account or the 529 Plan. Both are great plans and you can learn more by looking at my source below.

If you are looking to save for retirement, you should learn more about Roth IRA or Traditional IRA.