Hi anon,
ā
What is your aim? I'm assuming the plan is for the benefit of your son.
ā
Let's talk about Endowment.
ā
Are you aiming to set aside funds for education? In that case, as PolicyWoke wrote below, resale endowments may be one way to go. As your son is already 5 years old, the timeline horizon till university is about 15 years.
ā
The thing to note about resale endowments is that you may need a larger initial upfront amount as you are buyiong a policy that has been in force for a while and will likely have some cash value. On top of that, it is possible (and quite likely) that you will need to service regular premiums for a while longer. The trade off is that part of the 'heavy lifting' has been done for you as you are not starting from scratch.
ā
Think of it as putting a downpayment for a house and then paying the remaining installments.
ā
If the initial upfront cost is something that you may not have the ability to pay, then starting a regular premium endowment plan may be the best way, as you do not have an upfront cost, just the regular premiums. There are endowment plans that project 3+% in 15 years, as I have just helped a couple do one recently for their daughter, who is also projected to start university in about 15 years. The reassuring part is that you know that the money will be there, even if there is a market crash the year that the plan matures. They are usually 'better than capital guaranteed' which means you are definitely going to get more than what you put in, except that we do not know how much more (this depends on bonuses).
ā
You'll want to compare such plans across premiums, guaranteed and non guaranted returns, across various insurers.
ā
Now let's talk about whole life.
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The purpose of getting a whole life plan is to ensure that your son is protected for the rest of his life. Usually as an advisor I would be looking at a whole of life plan with CI riders attached. Such plans are also paid over a few years like the endowment plans.
ā
The payouts, if they ever occur, are either 1) if they occur when your son has not yet started working, for you and your spouse to have the funds to potentially take time off work to take care your son or 2) if they occur after your son starts working, for him to be able to take time off his work to focus on recovery.
ā
Either way, having this payout will alleviate financial issues.
ā
You'll want to compare such plans across insurers, premiums, scope of coverage and payout structure.
ā
So then, which is better for your son? This depends. But if you have to choose one, I'd take the whole life first. Often, we don't think a lot about our health and assume that it's ok. But all it takes is one diagnosis and that can have the effect of changing your son's insurability forever. So securing your son's insurability is to me, of greater importance than securing the education funds.
ā
Having said that, it is possible to spread your budget over both as well. But this requires a discussion beyond the confines of this post.
ā
Good luck!
Hi anon,
ā
What is your aim? I'm assuming the plan is for the benefit of your son.
ā
Let's talk about Endowment.
ā
Are you aiming to set aside funds for education? In that case, as PolicyWoke wrote below, resale endowments may be one way to go. As your son is already 5 years old, the timeline horizon till university is about 15 years.
ā
The thing to note about resale endowments is that you may need a larger initial upfront amount as you are buyiong a policy that has been in force for a while and will likely have some cash value. On top of that, it is possible (and quite likely) that you will need to service regular premiums for a while longer. The trade off is that part of the 'heavy lifting' has been done for you as you are not starting from scratch.
ā
Think of it as putting a downpayment for a house and then paying the remaining installments.
ā
If the initial upfront cost is something that you may not have the ability to pay, then starting a regular premium endowment plan may be the best way, as you do not have an upfront cost, just the regular premiums. There are endowment plans that project 3+% in 15 years, as I have just helped a couple do one recently for their daughter, who is also projected to start university in about 15 years. The reassuring part is that you know that the money will be there, even if there is a market crash the year that the plan matures. They are usually 'better than capital guaranteed' which means you are definitely going to get more than what you put in, except that we do not know how much more (this depends on bonuses).
ā
You'll want to compare such plans across premiums, guaranteed and non guaranted returns, across various insurers.
ā
Now let's talk about whole life.
ā
The purpose of getting a whole life plan is to ensure that your son is protected for the rest of his life. Usually as an advisor I would be looking at a whole of life plan with CI riders attached. Such plans are also paid over a few years like the endowment plans.
ā
The payouts, if they ever occur, are either 1) if they occur when your son has not yet started working, for you and your spouse to have the funds to potentially take time off work to take care your son or 2) if they occur after your son starts working, for him to be able to take time off his work to focus on recovery.
ā
Either way, having this payout will alleviate financial issues.
ā
You'll want to compare such plans across insurers, premiums, scope of coverage and payout structure.
ā
So then, which is better for your son? This depends. But if you have to choose one, I'd take the whole life first. Often, we don't think a lot about our health and assume that it's ok. But all it takes is one diagnosis and that can have the effect of changing your son's insurability forever. So securing your son's insurability is to me, of greater importance than securing the education funds.
ā
Having said that, it is possible to spread your budget over both as well. But this requires a discussion beyond the confines of this post.
ā
Good luck!