Last week I met with a young couple, Chanda and Gursh, who had recently started practicing. They’d just moved into their new home, and Chanda is on maternity leave with their young daughter. A very exciting (and busy) time for them!
We discussed how an Education Savings Plan could help their daughter’s eventual education costs. Chanda asked, “Is there anything else we should do for her? What do YOU do for your children?”
I’ve always said if you want to know what your advisor believes, see how they spend *their* money. My own money was where my mouth is when I answered,
“You might want to consider how insurance on her could make a difference.”
Gursh and Chanda shifted in their chairs and looked a little uncomfortable.
I smiled and said, “I know what you’re thinking. Parents often wince when I say this. But I come at it from a different angle. Life insurance for kids is one of the cornerstones for helping them have a strong financial future. Here’s what we’ve done for our boys.”
And I shared what I think are four of the neatest uses of insurance not many parents know about.
Life Insurance Can Help Educational Costs or Home Down Payments
For our boys, we have life insurance and critical illness policies. (I’ll write about critical insurance in an upcoming blog post!)
Like you, I couldn’t handle the thought of something happening to them, but that’s not actually why we have our policies. Both policies will protect them for life, but they’ll also play an important role in their educational costs or eventual down payment for a home.
The life insurance we purchased for our sons never needed anything more than my wife’s and my medical histories. They each have $250,000 of permanent coverage, which we can stuff additional tax-free savings within to grow and compound.
There are loads of benefits:
- When they turn 18, we can transfer the policies to them, including all the investment growth, to them tax-free.
- They can withdraw the investment component to help with educational costs, with any taxable portion at their much lower tax rate.
- Every three years, we can add an additional $250,000 more coverage regardless of their health.
- Keeps their options open such as starting their own practice, buying into a partnership, or other ventures where life insurance is required to secure a loan.
I love knowing our sons’ financial futures are already secure.
And getting creative with life insurance is one of the best ways to do it.
Chanda and Gursh told me they’d never thought of insurance this way before – it made my day!
Enjoyed this article? I’d love to hear from you! I’m always interested in hearing about the unique financial situations doctors have. Send me a note!
