How To Use Your Insurance To Help Your Adult Children

If you are trying to help your adult children find their financial footing during the current recession, you're not alone.

A study recently presented at a meeting of the Population Association of America found that most young adults today are getting a monetary boost from Mom and Dad. According to the study, 62 percent of young adults receive help, and it's not just pocket change. The average amount of assistance was $12,185. The money goes for such things as college tuition, vehicle expenses and rent.

The need for young adults to lean on their parents is understandable. A recent study by the Pew Research Center found that only about 54 percent of people between ages 18 and 24 are employed. Those who are working full time have experienced a greater drop in weekly earnings -- 6 percent -- than any other age group in the past four years.

Your children may be hurting financially, but there's no reason to place your own finances in jeopardy in order to come to their aid. There are a variety of ways to use insurance policies to help them achieve financial security.

1. Create a legacy through life insurance

"Most people think life insurance is for straight death benefit protection," says Kristen Komer, a spokesperson for MetLife. "But life insurance is a great financial solution for those who want to leave a legacy."

Life insurance benefits are tax-exempt, which makes this a good way to transfer wealth from one generation to another.

2. Use a life insurance policy's cash value to provide funds

A typical permanent life insurance policy has a cash value account that grows over time. If you have such a policy, you can tap into its cash value.

According to the Pew Research Center, 39 percent of young adults ages 18 to 34 remain at home with their parents or have temporarily returned because of the tough economy. Komer says borrowing against your life insurance policy's cash value can be one way to help children pay off loans, buy a home or start a business. That can move them into independent living.