Most insurance companies don’t approve of anyone purchasing life insurance on a child or grandchildren unless at least one of the parents of that minor has life insurance on their own life. This significantly keeps the probability extremely low of some psychopath purchasing life insurance on a vulnerable minor and then subsequently filing a claim when a pre-planned mishap occurs. Regrettably, there are some very evil people in the world who have attempted and even succeeded in doing such a thing in the past. Restricting who can own a minor’s life insurance policy is one of the ways the insurance companies have successfully thwarted such gruesome endeavors.
That being said, parents and grandparents can own life insurance policies on the minor members of their families, if they are willing to work within the precautionary protocols which the insurance companies have defined. The value of “The even distribution of age classes” was something Nelson Nash spoke at length about in his book as well as his live presentations because he understood the wealth which can be generated and proliferated.
For example, on the life of a 2-year-old girl, the parents or grandparents could purchase a participating whole life insurance policy for $2,000 per year, with a reduced death benefit and the policy completely paid-up (no more premiums required) by the time this young lady turns 21. The $38,000 paid in premiums over those 19 years will grow for the rest of this woman’s life, and with dividends the cash value accumulation will become greater than $437,000 by the time she turns 70. This fortunate daughter, or granddaughter, can rest assured that she will have enough capital to live comfortably for the rest of her life because of the generous and thoughtful planning by her parents and/or grandparents.
But to truly make such a plan become perpetual, the even distribution of age classes must be understood and adopted by each proceeding generation. In this case, if the parents are the ones who initiated the policy on their daughter, then she must be taught and instructed on how she can do the same for her own daughters, and sons. Otherwise, the wealth which the even distribution of age classes can deliver will be destroyed and not become generational.
Multiple policies purchased on each child or grandchild will only make “The even distribution of age classes” perform better. And of course, knowing that the parents must be insured prior to insuring their minor child (ren), the death benefit of the parent’s life insurance policies should more than cover the cost of the premiums necessary to fund the life insurance policies on the next generation.
Too many people have fallen into the mindset of not really caring about what happens to the next generation financially. Maybe these parents have spent money for their children’s education or weddings which they really should have been saving for their own future needs and now they are trying to cram for their own retirement.
But here’s the truth, if parents or grandparents would understand “The even distribution of age classes” and insure themselves and their children and grandchildren appropriately, America would NOT be in the dire financial situation if finds itself in today. It is pathetic that 90% of seniors are dependent on Social Security for at least 1/3rd of their income in America today. But if parents and grandparents will follow “The even distribution of age classes” in funding participating whole life insurance there will be plenty of money for educational needs, weddings, down payments on homes, etc.
Nelson Nash provided wise instruction and much financial knowledge. Heeding these instructions can produce greater economic benefit in your family. Let us know if you’d like to look at options for starting policies on your children or grandchildren.
Dr. Tomas P. McFie
Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of Life Benefits which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, How to Build Sustainable Wealth, can be purchased here.