Why Dad…Why? A Life Insurance Story!

kid-handshake

Let me start off by saying I am very appreciative of all the help that friends and family have provided me over the years!  I don’t mean to sound ungrateful at all, but rather want to use my situation to teach others.

My dad recently called me and told me that he had taken out a whole life insurance policy on me right after I was born and he was turning it over to me now that I have my own family.  I was stoked!  Free Money!

It was a $25,000 whole life policy that my dad paid $189/year in the event I passed away, they would have money to bury me.  Kinda morbid, but a reality.  The sales person talked about me having the ability to use it for college and the ability to take loans from the policy tax-free…blah…blah…blah…

Today I own a whole life policy that has a death benefit of $28,002 or I could take my cash value of $6,668.62 out to use for anything I want.

Here’s the problem…

If my dad would have just put that FIRST $189 payment into an S&P 500 fund it would have grown to $10,542.42 of cash.  THAT IS JUST THE FIRST PAYMENT!

If he would have put that same $189/year into an S&P 500 fund until he turned it over to me, I would have an account balance of $74,511.36!

Again, I am not ungrateful for the gift, but that can be the difference between the next generation going to college or not…having the ability to take on the risk of a business venture or not…spending more time with kids or not.

What would an extra $67,842.74?

 

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