This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How To Use Your Insurance To Help Your Adult Children

Marvin Feldman, president and CEO of the nonprofit Life and Health Insurance Foundation for Education (LIFE) in Arlington, Va., notes that while using a permanent life policy's cash value can be a great gift to children, parents should avoid putting themselves in financial jeopardy.

"The first thing they need to do is consider their own financial situation," he says. Consider whether you might need that cash value yourself.

3. Buy life insurance for your child

The main reason to buy life insurance is to replace a wage earner's income. Although it often is dismissed as unnecessary, buying a permanent life insurance policy for a young child can be beneficial, says Komer. "It's a great first start to getting them some financial security, something you should think about right away."

For example, Komer says a $20,000 policy purchased at birth may accumulate as much as $4,000 in cash value by age 18. With annual premiums often less than $200, this can be a vehicle for helping a child get cash for college or other needs.

There's a downside to borrowing against the cash value of such a policy. Not only can it reduce the amount of cash available in the future, but depending on the specific provisions of the plan, it also can reduce the death benefit.

If you are planning the gift of a life insurance policy, consider life insurance companies that offer guaranteed coverage riders that allow your children to increase their coverage level in the future without having to go through the underwriting process. This means they'll be able to buy more coverage in the future regardless of health conditions.

4. Keep an adult child on your health insurance plan

Health insurance doesn't come cheap. The Kaiser Family Foundation found the average annual cost in 2010 for single coverage on the individual market was $2,580. For that price, many young adults see health insurance as a luxury.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 16,654.77 +369.26 2.27%
S&P 500 1,987.66 +47.15 2.43%
NASDAQ 4,812.7080 +115.1720 2.45%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs