my wife has taken out universal life ins policys on both kids ages 2 and 18 mths thru her mother who is an insurance broker - policys r in the amount of $200K and $150K - my opinion - a total waste of money as a savings vehicle for their education or a investment.
any opinions or suggestions r welcomed. regards.

Wondergirl

Life insurance on children used to be called burial insurance. Nowadays, more can be done with policies besides getting enough money to bury someone. Check into rolling over the policy into an annuity or an IRA or some other investment vehicle. Maybe your wife was thinking about more than just buying from her mother.

My father bought a $2000 life insurance policy when I was born, handed it over to me when I got married, and later in my 30s, I rolled it over into a broader kind of insurance policy that has grown tremendously ($85,000 now) and allows me to borrow from it.

Fr_Chuck

universal life is a very poor investment tool. Normally way to much front in load costs, and the insurance costs high compared to equal amounts of term coverage.

I am a licensed agent and I know this is a product companies try to push, because of the high commission the agents make, and the profit the company makes.

In the US there are special tax free savings plan or even mutual funds that do much better than this long term

nikosmom

Chuck I don't agree with "companies pushing Universal Life because of high commission"... I suppose that could vary by what company you work for. That also sounds like the works of unscrupulous agents - thinking on commission rather than what best suits their client's needs.

Many people like Universal Life because it's a flexible permanent policy; you can change the death benefit as your needs change. Personally I'm a fan of a small Whole Life policies for kids and the reason is that it's cheap for them. The best time to purchase this is when your kids are young. A small Whole Life policy will be less maintenance than a Universal policy and it will have time to grow so the extra money can be used to either add to the death benefit or as a loan from the policy if needed.

I don't really think anyone should buy life insurance for the sole purpose of it being an investment tool; I think that's an added benefit. I think as Chuck mentioned, you should look into Mutual Funds and Roth IRAs if you're looking for ways to invest for your children.

I don't think your kids would need Universal policies in such large amounts. Also with a whole life policy, after a few years it will build enough cash value to keep the premiums paid as long as there are no outstanding loans on it.