All parents want to be there when their children need help. Many clients want to retain access to large lump sums just in case their children fall into desperate stakes. This is usually at the cost of low earnings from term deposits.
However, my most astute clients protect their children from life’s calamities via personal insurances. That is, the parents have taken out insurance on their children. In the event of illness or worse, they have the liquid funds to support their grandchildren and in-laws. The premiums for the insurance can be covered by the extra return that can be achieved in investing in something better than a term deposit.
Often our children are under-insured as they believe they are bulletproof or haven’t had enough life experience to understand things go wrong with monotonous regularity. Therefore getting them to understand life’s risks can be a challenge. Providing insurance for them provides you with peace of mind, your grandchildren with security and your children with a possible tax deduction.
Most of us have accumulated our nest egg through hard work, prudence and perseverance. That money is there to provide comfort in our later years. If you have to draw on those funds to support your children and grandchildren your lifestyle is compromised. However, insuring your children can help protect your lifestyle in your retirement.
Taking out insurance becomes more expensive as we age. So taking out insurance on your children when they are young adults is inexpensive and more likely to be at standard rates as they will hopefully have not adopted the habits or had the mishaps that make insurance difficult in their later years.
If you have adult children and you wish to protect them and your grandchildren and your own assets from misfortune that may befall them then consider insurance as a cost effective option.
Contact us if you would like to discuss support for your children or your personal financial plan.
David Baruffi is an authorised representative and credit representative of AMP Financial Planning.
Blueprint Planning Pty Ltd (ABN 78 097 264 554), trading as Blueprint Wealth, is an authorised representative and credit representative of AMP Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee (AFSL / ACL 232 706).
This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.