Canadian Money Forum banner
Cancel

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

11383 Views 28 Replies 13 Participants Last post by  ssimps, 
M
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
Reply
Save
Like
1 - 8 of 29 Posts
M
Thanks for the replies guys. My goal was give the kids one less thing to worry about when they get older and at least they can leave something to their kids/my grandkids with their own policies. I have an amount saved up and two small rental properties which I think will allow my wife and kids to live on even if I were to pass. This is why I didn't really feel to attracted to term life, but I will research again.

My interest or main goal was to leave each of my 4 children with a million bucks when I go and I prefer if they were alive also to enjoy it :) So in other words I am doing it more of a wealth protection to leave them and at the same time the whole life had the cash value and life protection. What I was not able to understand 100% is if I can make more using another vehicle of investment.

My business, is very slow compared to what it was in the past 5-10 years because of the US economy, so I am actually enjoying the time off from working 18-20 hour days. My income is MUCH less than it use to, but I was able to pay off all my debt while business was good and now my expenses are much less also. At the same time i am enjoying the time with my kids.

I am just looking for ways right now to make my wealth grow but in a safe way. I am not into the stock market. I invested and lost just like everyone else, but I was patien enough not to dump it and waited till I came in the green and sold last week. I didn;t enjoy the feeling I had everyday of worrying if I was going to lose more and more so I am looking for safer/lower return investments.
See less See more
Reply
Save
Like
M
LOL...nice one! and thanks for the compliment.

Are you saying like take out a few term plans instead of one whole life and just help then continue paying for it or make them pay for it?

or am I misunderstanding here?
Reply
Save
Like
M
Would Universal Life still be as bad? The only thing that would be taxable if i died tomorrow, for my wife/kids would be the rental property. capital gains on that. I have a good chunk in liquid savings but only 30k in RRSPs. This is the reason i was looking more at insurance and retirement building. Although I am proud of the liquid assets I have been able to save, I would like to find a way to make this grow, so I don't have to worry about my retirement and leaving $$ to my wife in kids.

Let's say from this day forward I decide to get a part time job making 40k year (which I think I can live comfortably on), would i be able to make somethign good for my retirement and leave to my kids or do I still need many years of high income? Also should I be worrying less on insurance and more on RRSPs and RESPs?

Thanks
Reply
Save
Like
M
You are right. I have been saying to myself that I rather have the $$ to give to my children before I go, so I can see them enjoy it. 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.

As for the million $$ number each, I figure that by then it would be worth at least 1/2 that and I would love if I could pay off their mortgage or somethign where they could live a comfortable life without the stress on money and rather spend the time raising their kids.

Maybe it's an unrealistic vision I have or even one that will spoil them, but once i have the plan in place and I know the money is there I will work on the best time/way to give it to them
Reply
Save
Like
M
Congrats on being mortgage free also DrStan!

I definately agree with you that all these values are priceless, but I came from a poor family and my parents never really knew or had the chance to save any money aside for us. My parents are now in their 60s and still both working because they have to. I don't expect them to leave me anything when they go, but it would of been a little relief to know that I don't need to stress myself so much about saving enough for my retirement. If I had a lump sum I knew my parents had put aside for me, I find I would of enjoyed life a bit more by travelling with my kids, or with my parents. Right now all I think about is working as much as I can to put aside for the retirement or the rainy day. Not sure if I am expressing myself correctly.

If we were to leave my kids a ton of cash and no education then they would probably blow it all in a couple years and for this reason I plan on doing a good combination of both.

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?

Thanks again guys!
See less See more
Reply
Save
Like
M
$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
Reply
Save
Like
M
I am not looking to profit from my kids. I am just trying to make it easier on them. For example, I am stressed or thinking of ways I can make my money grow so I can leave to my kids when I go. If I had a policy of a million bucks, then I would not have to worry about that and enjoy my money today at a much fuller extent. I could literally blow every penny I had, as long as it lasted me through retirement.

This was my way of thinking when I was considering life insurance on my kids
Reply
Save
Like
1 - 8 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.
Canadian Money Forum
A forum community dedicated to Canadian personal finance enthusiasts. Come join the discussion about investing, stock portfolios, equities, frugality, real estate, market trading, taxation, retirement, and more!
Full Forum Listing
Explore Our Forums
Investing Off Topic Lounge General Personal Finance Talk Individual Stocks/Equities Real Estate
Top