Canadian Money Forum banner

Whole life Insurance for myself and kids worth it? or better invest elsewhere?

11385 Views 28 Replies 13 Participants Last post by  ssimps
Hi guys,

I am 32 years old and just finished paying off my mortgage. I have no life insurance and not much in RRSPs yet, but have a good amount in savings account. I have 4 children and my dream would be to leave them with at least one million each. I would prefer to leave them this amount before I pass away so I can see them enjoy it, but I am not sure it will be possible.

I was looking into a Whole life Insurance policy for myself with a quick pay 10. So basically it would cost me $9.5k/year for 10 years and after that I would have protection all my life for a million dollars. I am trying to understand if this is worth it or if I could make more investing in something safe myself.

I was also thinking of starting a policy on each of my children which would roughly cost about $4k each per year for 10 years and then no more payments. This is also 1 million each, but will it be worth anything in 70 or 80 years when they die?

We are looking at about 24k/year in insurance policies for the next 10 years here accounting to 240k. I don't have a mortgage to pay anymore which makes it much easier to afford, but it is not a small amount either. I would have to tighten my belt a bit on other stuff, but if it would be worth it in the long run, then I would definately be prepared to do it. Obviously the insurance agent is going to try and sell me as much as he can, but I would love the feedback from the rest of you here that have setup something similar or thought of it and then decided not to.

Am I better off taking the 16k for the kids or 24k for all and investing it elsewhere. Can I end up with more money in the long run? Please keep in mind I want this to be a safe investment so I definately will not get 8% returns in my opinion, but let me know your thoughts/advice anyway.

Thank you.
See less See more
1 - 4 of 29 Posts
If giving $1M legacy to each of your kids is your only goal, then this may be the easiest way.

However, I would question a couple of things:
- You may live to a ripe old age (with God's grace). When your time comes around, your kids will be grown up adults and may be in their 40s or 50s. Would $1M from you be as meaningful to them at that point rather than you spending the insurance premium money on them now (education, travel, cultural enrichment, whatever).
- Why do you feel you need to leave $1M each for your children?
The reality is I don't think my money will grow enough by then to have a significant amount to leave them while keeping enough for my wife and I to enjoy our retirement.
You are ready to commit 24K a year for 10 years to insurance premiums.
My point is that you can probably get a term policy with decent coverage for about $500 a year (you are young and presumably healthy).
Now imagine what you can do for your family with the other 23.5K a year.
That can easily pay for a trip to Europe every year, a vacation in the Carribean every year, sports/music lessons, high-end summer camps every year, foreign language lessons, etc.
Those things will go a long way towards enriching their childhood and giving them key skills to make their own way in the future.
This is just my personal opinion, of course.
The things I mention are intangible and you can't use a spreadsheet to calculate financial pros and cons of these.
I am 33 years old and have young kids, too.
All I can say is if I had 24K disposable every year for the next 10 years, this is exactly what I would do.
I looked into a term 20 plan and the price would be 900/year. This is the cheapest I found. Also they have term 100.
Do most of you have term 10 or 20?
I have Term 20 and it's a lot cheaper ($350 a year).
Which province are you in?
Have you shopped around?
$350/year for a million bucks? wow! I am in Quebec and I shopped around on many online quote sites. I am non smoker in good health
Ops sorry didn't realize you were still looking for $1M.
The $350 I have is for $450,000 in ONT.
So $900 for $1M is probably fine.
1 - 4 of 29 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.