Help me with my FIL and an Insurance investment for my child

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nasrullah
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Help me with my FIL and an Insurance investment for my child

Post by nasrullah » Wed Jun 13, 2018 10:53 am

My FIL has decided he wants to buy his grandchildren (my kid included) an investment in the form of life insurance.

What the heck kinda snake oil has he been sold?

We got wind of it because he needs birth details and SSNs to set it up. I'm not really inclined to give him SSN in the first place (other issues), so I'm hoping there's a chance I can maneuver him into a different investment vehicle (why not our 529 for example).

Does anyone have a guess what he's gotten himself into, and what information I can counter with?

Rupert
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Re: Help me with my FIL and an Insurance investment for my child

Post by Rupert » Wed Jun 13, 2018 10:54 am

He's buying them life insurance. Don't give him the info he needs to do it. "Insurance investment" is an oxymoron.

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Pajamas
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Re: Help me with my FIL and an Insurance investment for my child

Post by Pajamas » Wed Jun 13, 2018 11:00 am

There are a lot of articles on the internet about why whole life is not a good "investment" for children but here's one from a valued contributor to Bogleheads:

https://www.whitecoatinvestor.com/6-rea ... -children/

Whole life insurance is generally not recommended except by those who are selling it for the high commissions.
Last edited by Pajamas on Wed Jun 13, 2018 11:02 am, edited 2 times in total.

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David Jay
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Re: Help me with my FIL and an Insurance investment for my child

Post by David Jay » Wed Jun 13, 2018 11:01 am

Typically, this is not "paid up" insurance, which means at some point in the future someone other than your FIL will have to assume the payments.

I am very opposed to this arrangement because he is imposing a burden (either a payment or dishonoring a grandparent's gift) on your children. My parents took out one of these policies and then asked me, as a young adult, to assume the payments. There really was no good option for me at that point.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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David Jay
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Re: Help me with my FIL and an Insurance investment for my child

Post by David Jay » Wed Jun 13, 2018 11:05 am

Pajamas wrote:
Wed Jun 13, 2018 11:00 am
There are a lot of articles on the internet about why whole life is not a good "investment" for children but here's one from a valued contributor to Bogleheads:

https://www.whitecoatinvestor.com/6-rea ... -children/

Whole life insurance is generally not recommended except by those who are selling it for the high commissions.
I like White Coat Investor, I missed that article.

Nasrullah - send your FIL that link.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

NotWhoYouThink
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Re: Help me with my FIL and an Insurance investment for my child

Post by NotWhoYouThink » Wed Jun 13, 2018 11:24 am

After you send your spouse that link, let your spouse deal with it. Each partner deals with his/her own parents and siblings. Best case is he decides to contribute to a 529. Worst case he wastes some money, but not your money.

My in-laws gave my kids all kinds of junk they didn't need. We thanked them and got rid of most of it. No big deal. As long as FIL is paying for it, it's a mediocre to bad investment but it won't cost you anything. When he presents it to your grown kids one day, you will already have coached them to sincerely thank him for his generosity and then cash it in.

These policies creep me out. But then so does Hello Kitty!

Grt2bOutdoors
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Re: Help me with my FIL and an Insurance investment for my child

Post by Grt2bOutdoors » Wed Jun 13, 2018 11:50 am

nasrullah wrote:
Wed Jun 13, 2018 10:53 am
My FIL has decided he wants to buy his grandchildren (my kid included) an investment in the form of life insurance.

What the heck kinda snake oil has he been sold?

We got wind of it because he needs birth details and SSNs to set it up. I'm not really inclined to give him SSN in the first place (other issues), so I'm hoping there's a chance I can maneuver him into a different investment vehicle (why not our 529 for example).

Does anyone have a guess what he's gotten himself into, and what information I can counter with?
Is he insuring his life, so when he passes, they are the beneficiaries?
Or is he buying a life insurance plan on them? Something like the Gerber G (insert TH here) row-up Plan? :twisted: Inform him if that is the case, the only time they will pay out on the money is for them to "die". How is that an "investment"? :annoyed
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Nate79
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Re: Help me with my FIL and an Insurance investment for my child

Post by Nate79 » Wed Jun 13, 2018 2:38 pm

I read the title and threw up a little.

Insurance is not an investment.

delamer
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Re: Help me with my FIL and an Insurance investment for my child

Post by delamer » Wed Jun 13, 2018 3:13 pm

NotWhoYouThink wrote:
Wed Jun 13, 2018 11:24 am
After you send your spouse that link, let your spouse deal with it. Each partner deals with his/her own parents and siblings. Best case is he decides to contribute to a 529. Worst case he wastes some money, but not your money.

My in-laws gave my kids all kinds of junk they didn't need. We thanked them and got rid of most of it. No big deal. As long as FIL is paying for it, it's a mediocre to bad investment but it won't cost you anything. When he presents it to your grown kids one day, you will already have coached them to sincerely thank him for his generosity and then cash it in.

These policies creep me out. But then so does Hello Kitty!

Excellent advice. Let your spouse deal with her/his father.

When I finished college my parents handed over to me a whole life policy, on me, that had taken out when I was little. It had a few hundred dollars in cash value. So I cashed it in.

This may be what your FIL is “investing” in.

(Too bad my parents didn’t put the premium money in DuPont stock or something similar, but that was their choice.)

sco
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Re: Help me with my FIL and an Insurance investment for my child

Post by sco » Wed Jun 13, 2018 11:40 pm

"How about giving them something that will help them remember you fondly, while they (and you) are still alive?"

dbr
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Re: Help me with my FIL and an Insurance investment for my child

Post by dbr » Thu Jun 14, 2018 10:16 am

nasrullah wrote:
Wed Jun 13, 2018 10:53 am
My FIL has decided he wants to buy his grandchildren (my kid included) an investment in the form of life insurance.

What the heck kinda snake oil has he been sold?

We got wind of it because he needs birth details and SSNs to set it up. I'm not really inclined to give him SSN in the first place (other issues), so I'm hoping there's a chance I can maneuver him into a different investment vehicle (why not our 529 for example).

Does anyone have a guess what he's gotten himself into, and what information I can counter with?
He thinks he is gifting them an investment, but he is mistaken. Who explains this to him and how is up to your family dynamics. Most likely the idea has been sold to him by someone. Maybe even one just graciously accepts the arrangement if you have to. There is lots and lots of info in the web regarding why this kind of insurance is a bad idea. Also the article previously linked to WhileCoatInvestor is a start.

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prudent
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Re: Help me with my FIL and an Insurance investment for my child

Post by prudent » Thu Jun 14, 2018 11:21 am

Topic moved to Investing - Help with Personal Investments.

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