Financial Conservation For Kids!Invest a few minutes and learn how a life insurance contract can help to supplement with important advantages the following milestone needs for your child:
- 4 Years of College Expenses
- Down Payment on a Home
- Annual Retirement Income Age 65 to100
The family is in the best position to give a child a head start in life by using the factor of time to its maximum advantage.
The benefits will be greater and the costs lower the earlier you start.
With the safety features outlined below, you will be putting the power of uninterrupted compound gain (the core principle of Financial Conservation) to work for your child over the course of their lifetime.
Major insurance companies that insure our health, homes and businesses have a wide selection of comprehensive plans available for children that will suit a variety of needs.
The goal here is to establish a core financial asset that will be both a safety net and source of funding for your child's important life events. We recommend a type of flexible permanent life insurance known as Fixed Index Universal Life (FIUL) that will build cash value over the course of your child's lifetime with the following advantages:
FIUL policies have built-in safety features -- guaranteed up front in writing -- that protect the accumulating cash value of the policy by automatically eliminating exposure to any losses during downturns in the economy and financial markets. The following guarantees are backed by major financial institutions with long-standing, top-rated, verifiable track records of responsibility and dependability:
- Safety of Principal
- Locked-In Gains
The cash value of a FIUL policy grows using a combination of the "indexing method" and competitive fixed rates of return that are declared annually. When using the index method, growth of the account value is tied -- for crediting purposes only -- to a major stock market index like the S&P 500 or Russell 2000. The cash value of the account is never directly invested in or exposed to the market.
Financial markets and the economies they reflect will move in cycles -- both positive and negative. The power of the indexing method is that it works in your favor when the cycles are positive, while, again, automatically eliminating the possibility of the cycles working against you when they take their turn on the negative side -- particularly at the wrong time in life. This is a hard lesson that has been repeating itself over the past two decades.
Yes, when the cycles are positive you will earn a lower rate of return because you have elected to pay essentially a premium for growth with safety -- compared to growth with risks -- that will give you automatic safeguards against the destabilizing and debilitating effects of compound loss.
However, based on the core principle of Financial Conservation, by eliminating the negative growth impact of compound loss from the financial equation along with the other advantages of FIUL, your child will be ahead and have financial stability in the long run.
Given the record levels of current government spending and mounting deficits, minimizing taxpayer costs within the letter of the law are increasingly important planning priorities. At some point, the government spending bill will arrive. We can count on that. And the estimated time of arrival as "the can gets kicked down the road" is particularly not looking good for our new and future generations.
FIUL provides the following:
- Tax-Deferred Growth of Cash Value
- Tax-Free Distribution (see explanation below)
- Tax-Free Death Benefit
Sections 7702, 72e and 101a of the Internal Revenue Code allow the cash value inside life insurance contracts to: 1) accumulate tax-free, 2) be accessed (including the gains) in the form of withdrawals and policy loans for retirement or other income purposes tax-free, and 3) be transferred income tax-free at death, when properly structured under tax citations TEFRA/DEFRA and TAMRA.
The cash value accumulating in a FIUL policy over the course of your child's lifetime has liquidity that would be there for unanticipated life events that would cause a short-term need for immediately available cash to protect and maintain fixed assets such as the equity in a home.
- Dollar Amount Restrictions on Funding of the Policy
- IRS Penalty Fees for Early Withdrawals Prior to Age 59 1/2
- Required Minimum Distributions
Please note that in order to maximize the Living Benefits of this type of plan, it should be properly structured by a state licensed insurance agent who has the right training and expertise. This is a plan for life and one size does not fit all.
The products offered by an independent agent are not limited to only one menu of choice from one company. We provide our clients the built-in advantage of being able to offer the most competitive rates and features from a wide selection of the top insurance carriers.
The process begins with a personal consultation with the family that will include a full illustration and quotes of how the plan works.
Click below to schedule your free consultation. When completing the form, please be sure to indicate "Kids" in the comments section.
You can also contact us directly with any questions you might have at douroux@financialconservation.com
Family Financial Planning
Serving Miami-Fort Lauderdale-Palm Beach Areas of South Florida & Southern California
(954) 303-7353
FL Insurance Lic. No. E183265 - CA Insurance Lic. No. 0D78620
