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Bought a term life insurance policy for my son. Not sure if that was a good move...

#1
I bought a term life insurance policy for my son from Northwestern Mutual shortly after he was born. He'll turn 7 in February.
 
Some details:
  • monthly premium is $178

  • accumulated cash value so far is about $8,500

  • the policy itself is worth about $310,000 and growing based on dividends and premiums paid (started at $250,000)

  • I've noticed that all premiums I pay now increase cash value about 1-to-1 (initially that was not the case, but I expected that)
 
Besides the life insurance policy, I'm also steadily investing for his college education through a 529 account and have accumulated about $50,000 so far.
 
Do you have any suggestions regarding the term life policy? Should I cancel it and just redirect the monthly outlays to his college fund?
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#2
A couple of questions -- Why did you buy the policy?  What objective was satisfied?  The most typical reason for owning life insurance is to provide financial protection for dependents if the covered person's income is lost due to death. (replacement for lost income).  Your 7 year old son probably does not have any significant income (some child actors excepted), so this is an unlikely reason.  If you had a reason, and the reason still exists, you might want to keep the policy
 
Gerber has a many decades old whole life plan for children that guarantees to provide access to additional insurance at specific ages.  This can be a good idea if the child becomes uninsurable, and is probably the primary reason people buy the policy.  If your term policy has guaranteed renewals, it might be worth keeping for that reason.
 
The policy face/premium seems very low (high cost) for term insurance for a child -----  only $1400 face per monthly premium dollar.  I'm getting 1000/1 for universal life, and I've got 7 decades rather than 7 years.  On the other hand, the cash value seems exceptionally good. It seems the term life policy is some hybrid that mostly builds cash with an insurance add-on.
 
Is it what you want?
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#3
(11-26-2018, 04:48 AM)Primm Wrote: A couple of questions -- Why did you buy the policy?  What objective was satisfied?  The most typical reason for owning life insurance is to provide financial protection for dependents if the covered person's income is lost due to death. (replacement for lost income).  Your 7 year old son probably does not have any significant income (some child actors excepted), so this is an unlikely reason.  If you had a reason, and the reason still exists, you might want to keep the policy
 
Gerber has a many decades old whole life plan for children that guarantees to provide access to additional insurance at specific ages.  This can be a good idea if the child becomes uninsurable, and is probably the primary reason people buy the policy.  If your term policy has guaranteed renewals, it might be worth keeping for that reason.
 
The policy face/premium seems very low (high cost) for term insurance for a child -----  only $1400 face per monthly premium dollar.  I'm getting 1000/1 for universal life, and I've got 7 decades rather than 7 years.  On the other hand, the cash value seems exceptionally good. It seems the term life policy is some hybrid that mostly builds cash with an insurance add-on.
 
Is it what you want?

Concept of thinking/planning ahead is good, but believe you are trying to cross cut a board with a hammer.
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#4
(11-28-2018, 03:19 AM)yandz Wrote:
(11-26-2018, 04:48 AM)Primm Wrote: A couple of questions -- Why did you buy the policy?  What objective was satisfied?  The most typical reason for owning life insurance is to provide financial protection for dependents if the covered person's income is lost due to death. (replacement for lost income).  Your 7 year old son probably does not have any significant income (some child actors excepted), so this is an unlikely reason.  If you had a reason, and the reason still exists, you might want to keep the policy
 
Gerber has a many decades old whole life plan for children that guarantees to provide access to additional insurance at specific ages.  This can be a good idea if the child becomes uninsurable, and is probably the primary reason people buy the policy.  If your term policy has guaranteed renewals, it might be worth keeping for that reason.
 
The policy face/premium seems very low (high cost) for term insurance for a child -----  only $1400 face per monthly premium dollar.  I'm getting 1000/1 for universal life, and I've got 7 decades rather than 7 years.  On the other hand, the cash value seems exceptionally good. It seems the term life policy is some hybrid that mostly builds cash with an insurance add-on.
 
Is it what you want?

Concept of thinking/planning ahead is good, but believe you are trying to cross cut a board with a hammer.

Fully agree. It does not make sense to take out insurance policy for children (they have no dependents).  Makes no sense. Also, he bought a Whole life, not a TERM, policy. Cancel. Invest the cash in a College Index fund.
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#5
Just curious but traditionally Term life insurance does not carry a cash value. Are you sure it's term? Also with that large of a premium for such a you age doesn't quite add up. That is a very, very high premium for a 7 year old so it's either a high amount of insurance or it may be being over funded on purpose (?).
 
It sounds like a Whole Life policy. If it is Whole Life, find out when it POPs (Premium offset).
 
Can you please clarify?
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