Edit: Big ol NO. Thanks everyone for your thoughtful and detailed responses!
For context, I’m 33 with twins on the way. My job pays 170k, we own our home, retirement is on track, and have $20k in a 529 for each child. In my early teens, poverty and its derivative effects tore my family apart. I spent the remainder of my childhood in the foster care system and that has kept me motivated to provide security and options for my future children.
My wife and I particularly want to provide support for our children in their early adulthood for things such as college, down payment on first home, support for a gap year, etc.. and are looking for vehicles to do that.
A financial advisor pointed us to permanent life insurance policies in the kids names. Note he is also an insurance salesman. From what I understand, payments above the minimum premium would go toward a cash balance and grow at some rate, tax free. This cash balance can be withdrawn from or borrowed against by our children in the future.
My questions- 1. Is the tax status the only difference between this cash value account and your standard brokerage account?
- Are there limitations on how we can invest the cash value in the policy?
It seems more sensible to invest in a brokerage account in our name, then gift them securities when appropriate. But please let me know if I’m not considering something!
Submitted July 16, 2023 at 08:45PM by lock_robster2022 https://ift.tt/KbcuDBe
