Bringing-up a child as a successful, responsible individual is a desire every parent has. Preparing them for the financial road ahead is a big task. That financial road ahead is paved with expensive price tags. Your child has to look forward to vehicle purchases, student loans, marriage costs, home purchase, and retirement. Maybe they have business aspirations or other projects which require huge sums of money. That’s a lot of things that require financing in one form or another. So how do you get them started on this financial journey without either of you breaking the bank? Enter specially designed whole life policies. That’s the head start your children can use to control their own financial decisions. Here’s a sample case.
Two parents have a 4 year old child.
They pick up a well-structured whole life policy for their child paying $200 each month or $2400 a year. (The policy works like a “banking” policy from Becoming Your Own Banker or Bank on Yourself. ) Because the child is only 4 years old the policy is designed to start small and grow larger in cash value by the time he reaches age twenty. By age 17, you child gets his first part time job and decides to buy his first car. He borrows $20,000 from the policy instead of a financing company and buys the car. He pays the loan back in four years so he can use that money again for his next big purchase. By age 20 the parents tell their son, “We’ve done our job. You have to make your own monthly premium payments from now on.” The kid who’s now a young adult looks at the cash value growing in his policy and realizes “If I pay only $200 into the policy each month and my policy cash value grows over $5000 in the very first year I take over! That’s fine by me. Thanks Mom and Dad!” The young adult looks into his future and says it’s time to go to get a post secondary education. He’s heard the news of how students come out of post secondary with massive debts. So instead of getting a student loan from a bank, he get’s it from himself. In the next four post education years, he borrows $50,000 from the whole life policy over this time to pay for his schooling. Coming out of school at age 25, he finds a career path that suits him and he starts paying back those student loans he took from himself. During this time he takes out another policy loan to finance his new career choices while he is paying back the old loans. By age 28, he and his “special someone” decide it’s time to get married. Mom and Dad look at their son and say “Congratulations you two. We’ve already help provided you a way to pay for your wedding during first 20 years of your life. So you don’t need our help anymore.” The soon-to-be-wed couple understand and take out another $10,000 policy loan to pay for the wedding. Over the first 30 years, every loan the son took out of has been paid back…to himself. And like clockwork, he’s been putting $200 each month to add to the cash values of his whole life insurance policy. At age 31, the couple have their first child. As soon as they can, the son sets up the same whole life insurance policy his parents provided him all those years ago. The new grandparents couldn’t be happier with that decision. At age 32, the happy family decide to buy their first home. Unfortunately the cash value in the whole life policy isn’t quite enough to entirely pay for the home. So they borrow the $80,000 from their policy to put a hefty down payment, and get a mortgage on the rest of the amount. The happy couple notice something awesome after ten years. Between paying back the policy loan, adding $200 each month to grow the policy’s cash value, and paying down the mortgage for ten years, they are in a great financial position. They have enough cash value in their whole life policy to pay off the rest of their mortgage. So they take out a massive policy loan to pay off the rest their home. Then they start redirecting their regular monthly mortgage payments back to pay off the policy loan so they can use those funds again. At age 38, the family decides to buy a new family vehicle so they take out a new policy loan from the funds they’ve been paying back to finance the purchase. At age 45, the couple decides to to take their children on an annual vacation. So they take another policy loan to pay for the vacation each year and pay off the policy loan each year. At age 60, the son decides to retire early and help his kids with their plans. He looks at the cash value sitting in his policy totaling over $650,000. All his major life expenses have been paid for. He decides to take an early pension or whatever is available. Finally he decides to borrow out part of the funds each year to subsidize his retirement completely tax free. Each year he takes out more money because the annual policy dividends he receives gets a little bigger. Altogether, over 60 years, $134,400 was put into the whole life policy. And it grew to over $650,000 tax sheltered. But it also allowed the son to pay for hundreds of thousands of dollars in major lifetime expenses all at the same time the policy was growing. Is this the Financial Head Start Your Children Deserve? Look at your own life. What did your parents do financially to help make you successful to this point. What worked? What could they have done better? Almost every parent makes sacrifices his or her own desires and wishes to make their child’s future secure. Many parents also face lot of hardships to save money and fulfill their child’s dream. Parents even stop caring about themselves when it comes to the career and future of their child. But just one smart decision can make things simple.