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Is whole life insurance policy ("WLI") for baby still bad idea?

I did some searching on FWF for Whole life insurance for baby and found two FWF posts from over a decade ago (linked below); I'm wondering if same is true for me today.

Facts: Baby almost born. Will assume healthy. Cost for fertility treatments was approx $60,000 over several years. For most recent (successful) treatments, we took a loan out for about 15K, which we plan to pay off in next 2 years.
I'm not using WLI to invest (not purpose of life insurance, imo). I DO care about the potential heartache of losing a child AND having to pay back a loan + knowing how much we spent on treatments. 

My thought is to sign up for ~25K WLI, and then after baby is approx 4 years old (when infant mortality drops significantly) drop the policy and take out what little cash is in (if any). Is this advisable? Pro/Con?

Former Whole Life Insurance threads for babies:
https://www.fatwallet.com/forums/arcmessageview.php?catid=52&thr...
https://www.fatwallet.com/forums/arcmessageview.php?catid=52&thr...

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If you plan to drop the insurance 4-5 years later, just get a term life policy for 5-10 years. You will get a lot more c... (more)

sloth911 (Aug. 16, 2016 @ 5:28p) |

To make matters worse, paying monthly has an additional finance charge vs paying yearly and this extra charge does not g... (more)

dhodson (Aug. 16, 2016 @ 6:56p) |

Thank you for sharing this.

highmktgoods (Aug. 16, 2016 @ 9:03p) |

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highmktgoods said:   Is whole life insurance policy ("WLI") for baby still bad idea?

I did some searching on FWF for Whole life insurance for baby and found two FWF posts from over a decade ago (linked below); I'm wondering if same is true for me today.

Facts: Baby almost born. Will assume healthy. Cost for fertility treatments was approx $60,000 over several years. For most recent (successful) treatments, we took a loan out for about 15K, which we plan to pay off in next 2 years.
I'm not using WLI to invest (not purpose of life insurance, imo). I DO care about the potential heartache of losing a child AND having to pay back a loan + knowing how much we spent on treatments. 

My thought is to sign up for ~25K WLI, and then after baby is approx 4 years old (when infant mortality drops significantly) drop the policy and take out what little cash is in (if any). Is this advisable? Pro/Con?

Former Whole Life Insurance threads for babies:
https://www.fatwallet.com/forums/arcmessageview.php?catid=52&threadid=518205 
https://www.fatwallet.com/forums/arcmessageview.php?catid=52&threadid=231917 

  I am not following your logic here. The money spent on fertility treatments are a sunk cost right now. You need to pay the loan (15k) regardless of whether your baby is healthy, lives a long life or god forbid something less than ideal.

The last thing you want to happen is lose the baby. If the worst were to happen, the emotional trauma cannot be eased in the least bit by a payout from an insurance policy. How does any kind of insurance on the life of the baby help in that regard?

ETA: Some folks suggest life insurance on a child to cover funeral expenses and tide over a difficult period when you may lose income (perhaps long leave without pay or potential loss of job when you are grieving). For the most part, you can/should self-insure for this --- as in have a sufficient emergency fund to cover this.

fwuser12 said:   
  I am not following your logic here. The money spent on fertility treatments are a sunk cost right now. You need to pay the loan (15k) regardless of whether your baby is healthy, lives a long life or god forbid something less than ideal.

The last thing you want to happen is lose the baby. If the worst were to happen, the emotional trauma cannot be eased in the least bit by a payout from an insurance policy. How does any kind of insurance on the life of the baby help in that regard?

ETA: Some folks suggest life insurance on a child to cover funeral expenses and tide over a difficult period when you may lose income (perhaps long leave without pay or potential loss of job when you are grieving). For the most part, you can/should self-insure for this --- as in have a sufficient emergency fund to cover this.

Usually I'd agree. However, maybe OP's not insuring against the sunk costs.
OP might be insuring against costs of getting a new baby if they lose the first one? Maybe it makes sense if that's the reason. (But then OP would want a ~$60k policy though, right?  Enough for similar rounds of treatments)

Bend3r said:   
fwuser12 said:   
  I am not following your logic here. The money spent on fertility treatments are a sunk cost right now. You need to pay the loan (15k) regardless of whether your baby is healthy, lives a long life or god forbid something less than ideal.

The last thing you want to happen is lose the baby. If the worst were to happen, the emotional trauma cannot be eased in the least bit by a payout from an insurance policy. How does any kind of insurance on the life of the baby help in that regard?

ETA: Some folks suggest life insurance on a child to cover funeral expenses and tide over a difficult period when you may lose income (perhaps long leave without pay or potential loss of job when you are grieving). For the most part, you can/should self-insure for this --- as in have a sufficient emergency fund to cover this.

Usually I'd agree. However, maybe OP's not insuring against the sunk costs.
OP might be insuring against costs of getting a new baby if they lose the first one? Maybe it makes sense if that's the reason. (But then OP would want a ~$60k policy though, right?  Enough for similar rounds of treatments)

  Bingo.
 

Bend3r said:   
fwuser12 said:   
  I am not following your logic here. The money spent on fertility treatments are a sunk cost right now. You need to pay the loan (15k) regardless of whether your baby is healthy, lives a long life or god forbid something less than ideal.

The last thing you want to happen is lose the baby. If the worst were to happen, the emotional trauma cannot be eased in the least bit by a payout from an insurance policy. How does any kind of insurance on the life of the baby help in that regard?

ETA: Some folks suggest life insurance on a child to cover funeral expenses and tide over a difficult period when you may lose income (perhaps long leave without pay or potential loss of job when you are grieving). For the most part, you can/should self-insure for this --- as in have a sufficient emergency fund to cover this.

Usually I'd agree. However, maybe OP's not insuring against the sunk costs.
OP might be insuring against costs of getting a new baby if they lose the first one? Maybe it makes sense if that's the reason. (But then OP would want a ~$60k policy though, right?  Enough for similar rounds of treatments)

    I guess I didn't articulate that well. In addition to all the sadness of a loss, part of the insurance benefit would help us get started on the next child. 

highmktgoods said:   
Bend3r said:   
fwuser12 said:   
  I am not following your logic here. The money spent on fertility treatments are a sunk cost right now. You need to pay the loan (15k) regardless of whether your baby is healthy, lives a long life or god forbid something less than ideal.

The last thing you want to happen is lose the baby. If the worst were to happen, the emotional trauma cannot be eased in the least bit by a payout from an insurance policy. How does any kind of insurance on the life of the baby help in that regard?

ETA: Some folks suggest life insurance on a child to cover funeral expenses and tide over a difficult period when you may lose income (perhaps long leave without pay or potential loss of job when you are grieving). For the most part, you can/should self-insure for this --- as in have a sufficient emergency fund to cover this.

Usually I'd agree. However, maybe OP's not insuring against the sunk costs.
OP might be insuring against costs of getting a new baby if they lose the first one? Maybe it makes sense if that's the reason. (But then OP would want a ~$60k policy though, right?  Enough for similar rounds of treatments)

    I guess I didn't articulate that well. In addition to all the sadness of a loss, part of the insurance benefit would help us get started on the next child. 

  A little morbid thinking in my mind. Anyway, isn’t life insurance for your dependants to survive on if you die? Unless this baby is going into acting soon after birth and will be earning 6 figures, it makes no sense to have life insurance on him. Surprised insurance companies would ever write policy’s for this. Would be quite tempting to welfare cheats to have another kid, buy a $100K policy and then a few months later the baby “accidentally” drowns in the bathtub.

atikovi said:     A little morbid thinking in my mind. Anyway, isn’t life insurance for your dependants to survive on if you die? Unless this baby is going into acting soon after birth and will be earning 6 figures, it makes no sense to have life insurance on him. Surprised insurance companies would ever write policy’s for this. Would be quite tempting to welfare cheats to have another kid, buy a $100K policy and then a few months later the baby “accidentally” drowns in the bathtub.
Aside from the fact that I find this entire discussion terribly distasteful from every possible angle, why wouldn't an insurance company underwrite such a policy?  The purchaser is gambling that the kid will die.  The insurance company is betting against the kid dying.  It's a financial transaction, pure and simple, and when merged with part of the provider's overall risk pool, they wouldn't write the policy if it didn't help their bottom line.  It's not about whether an infant is going to generate income or acquire any dependents or anything like that.  It's just a bet, same as in Vegas.  That's how the entire insurance industry operates.  We pay a much bigger vig to Progressive, Geico, State Farm, Allstate, and Liberty Mutual than we pay to sports bookies with lots of vowels in their names.

DTASFAB said:    why wouldn't an insurance company underwrite such a policy?  
  Why wouldn't  an insurance company underwrite a homeowners policy for more than the house is worth? Because the incentive for the homeowner to burn it down would be much greater. 

highmktgoods said:       I guess I didn't articulate that well. In addition to all the sadness of a loss, part of the insurance benefit would help us get started on the next child. 
 

O.k., so you are looking at this purely as a transaction: If I lose baby, I will want to make another one which will cost $xx. That is a substantial financial hit. Can I insure against this event by purchasing a policy costing $yy.

It is morbid for me to warp my brains around it but trying to think of it as say purchasing insurance on an expensive gadget. If the gadget fails, I want to replace it. Does it make sense to purchase the policy sold (pushed) by the salesperson. For the right price, perhaps.

Which brings up the question of, can you get a term life policy on a newborn (as opposed to a WL policy)?

This thread is getting morbid REAL fast *grabs popcorn*

fwuser12 said:   
highmktgoods said:       I guess I didn't articulate that well. In addition to all the sadness of a loss, part of the insurance benefit would help us get started on the next child. 
O.k., so you are looking at this purely as a transaction: If I lose baby, I will want to make another one which will cost $xx. That is a substantial financial hit. Can I insure against this event by purchasing a policy costing $yy.

It is morbid for me to warp my brains around it but trying to think of it as say purchasing insurance on an expensive gadget. If the gadget fails, I want to replace it. Does it make sense to purchase the policy sold (pushed) by the salesperson. For the right price, perhaps.

Which brings up the question of, can you get a term life policy on a newborn (as opposed to a WL policy)?

  Did you use an Amex to pay for the fertility treatments? Maybe it's covered under their 90 day damage-theft-loss purchase protection benefit.

atikovi said:   
DTASFAB said:    why wouldn't an insurance company underwrite such a policy?  
  Why wouldn't  an insurance company underwrite a homeowners policy for more than the house is worth? Because the incentive for the homeowner to burn it down would be much greater. 

If the underwriters have calculated that it's in their financial best interest to offer the policy, they'll offer it.  They're just bean counters.  The vast majority of people buying life insurance for newborn infants typically don't tend to be the type of people who would murder their own offspring for profit.  In other words, the incentive to kill would only entice people who wouldn't think of buying the policy in the first place.  The payouts on these types of policies I have to believe is rather low.

fwuser12 said:   
highmktgoods said:       I guess I didn't articulate that well. In addition to all the sadness of a loss, part of the insurance benefit would help us get started on the next child. 
O.k., so you are looking at this purely as a transaction: If I lose baby, I will want to make another one which will cost $xx. That is a substantial financial hit. Can I insure against this event by purchasing a policy costing $yy.

It is morbid for me to warp my brains around it but trying to think of it as say purchasing insurance on an expensive gadget. If the gadget fails, I want to replace it. Does it make sense to purchase the policy sold (pushed) by the salesperson. For the right price, perhaps.

Which brings up the question of, can you get a term life policy on a newborn (as opposed to a WL policy)?

 Part of benefits would help to pay for more necessary treatment, but it's not the only reason. Benefits would also pay for funeral and debt related to treatments, etc- all the usual reasons people purchase insurance. (Sort of like parents who pay for term life insurance for child when they've cosigned on child's private student loan.)

You cannot get a term life insurance product for children. 

fwuser12 said:   If I lose baby, I will want to make another one which will cost $xx. That is a substantial financial hit. Can I insure against this event by purchasing a policy costing $yy.
Just like buying an extended warranty on a car or new TV.

Do you have a term policy? Or is there group life insurance available through work?
Our coverage at work allows you to add children and I see term policies can have riders available so either might be available to you.
You might instead check if you can get a rider to provide coverage for your child. Should be much cheaper than a whole life policy an provide the same financial benefit.

atikovi said:   
DTASFAB said:    why wouldn't an insurance company underwrite such a policy?  
  Why wouldn't  an insurance company underwrite a homeowners policy for more than the house is worth? Because the incentive for the homeowner to burn it down would be much greater. 

Also, I think this is exactly the reason pet medical insurance is available, but pet death insurance is not.

DTASFAB said:   
atikovi said:   
DTASFAB said:    why wouldn't an insurance company underwrite such a policy?  
  Why wouldn't  an insurance company underwrite a homeowners policy for more than the house is worth? Because the incentive for the homeowner to burn it down would be much greater. 

Also, I think this is exactly the reason pet medical insurance is available, but pet death insurance is not.

  OT, but I know an attorney who does wills and estates practice who wrote a "Pet Trust." Pet trusts are valid and enforceable in my state. And there's a wrongful death clause...

DTASFAB said:   The vast majority of people buying life insurance for newborn infants typically don't tend to be the type of people who would murder their own offspring for profit. 
  And the vast majority of people buying homeowners insurance typically don't tend to be the type of people who would burn down their own house for profit, yet the the insurance companies won't write a policy for an amount greater than the value of the house.

highmktgoods said:   
DTASFAB said:   
atikovi said:   
DTASFAB said:    why wouldn't an insurance company underwrite such a policy?  
  Why wouldn't  an insurance company underwrite a homeowners policy for more than the house is worth? Because the incentive for the homeowner to burn it down would be much greater. 

Also, I think this is exactly the reason pet medical insurance is available, but pet death insurance is not.

  OT, but I know an attorney who does wills and estates practice who wrote a "Pet Trust." Pet trusts are valid and enforceable in my state. And there's a wrongful death clause...

It's one thing to leave money to an animal.  It's something else entirely to buy life insurance on the animal.  It's legal to kill them.  It's just not legal to mistreat them, in some cases.

atikovi said:   
DTASFAB said:   The vast majority of people buying life insurance for newborn infants typically don't tend to be the type of people who would murder their own offspring for profit. 
  And the vast majority of people buying homeowners insurance typically don't tend to be the type of people who would burn down their own house for profit, yet the the insurance companies won't write a policy for an amount greater than the value of the house.

  Well maybe you should get a job working as an underwriter for an insurance company, since you seem to know so much about it.

U2

atikovi said:   U2
  You said you were surprised they'd offer it.  I was simply explaining why they would.  I can't help that you don't like the answer.

Don't get whole life insurance for any purpose unless you are looking for a savings vehicle. Even if you are, you can get far better returns elsewhere.

Get some form of term policy that will cover the costs (old, new, or anticipated) you wish to mitigate and look to your employer for a policy first. If no suitable policies can be found, check with a credit union or bank and consult with whomever advises you on your home / renter and auto policies. It's almost always much less expensive to add a policy to an existing insurance account with discounts on the original policy often offered as well.

Another option is Costco or Sam's Club -- they offer insurance and claim it's less expensive than other sources. 

Just be sure to cancel the policy once your insured risk is minimized or gone, and for that you might wish to consider declining (or decreasing) balance term insurance that ends when the risk ends.

Also, many big companies provide assistance for fertility and adoption services, so look into those if your employers offer them.

Assuming the baby is born healthy, which would be required for life insurance....why on earth do you think the baby would die?

And if it did, the universe is clearly telling you that you should not be parents.

rascott said:   Assuming the baby is born healthy, which would be required for life insurance....why on earth do you think the baby would die?

And if it did, the universe is clearly telling you that you should not be parents.

  Ya lost me at that bit of wisdom.

Why whole life?
It seems like term life is designed for peace of mind during your new parent jitters.

atikovi said:   rascott said:   Assuming the baby is born healthy, which would be required for life insurance....why on earth do you think the baby would die?

And if it did, the universe is clearly telling you that you should not be parents.

  Ya lost me at that bit of wisdom.


Natural selection?

taxmantoo said:   Why whole life?
It seems like term life is designed for peace of mind during your new parent jitters.

  I have heard that term life is impossible to find for children. Something about infant mortality rates being low and administrative costs high for insurance companies...
 

In addition to riders for adult policies I mentioned above there is this option :

http://www.humana-one.com/supplemental-insurance/child-life/

Starts as term and converts to whole.

I actually have (and used, sadly, for one) term life on my children, provided through my employer.

It was capped at $1,000 in the first year of life, and then $10,000 until age 18. $1,000 is enough to provide for typical burial and/or cremation expenses for a very young child.

But the premium: $15 annually, covering all children until age 18.

We are also IVF parents.

ETA: My parents had a small whole life policy on me that I was asked to pay the premiums on starting at age 18.  I got tired of paying the bill several years back (the premium was $8 per month) and we cashed out roughly $6,300 after the policy had been in force for 40 years, which I split with my parents in proportion to our premiums paid.  That's a pretty small return given the time period, and that included reinvested dividends.

I think the most rational reaction is to compare this to cosigning student loans for a child and then also taking a life insurance policy out on the new college student. The kid dies, the loans are settled. My question to OP is, what is their income/assets like and could a financial hit like the loss of a child be handled? I have no idea the going rate on fertility treatment loans are, but if it's a 2 year loan at 10%, he's looking at $692/month in payments, which may be a small risk or potentially ruinous on top of funeral expenses, etc.

OP, do you and the wife have the financial wherewithal to handle the loan for the next two years? If so, it isn't really a risk you need to insure against. If not...you have bigger problems on your hands once the kid starts eating real food, but the $10-$15/month or so might be an extremely cheap hedge to consider.

If you plan to drop the insurance 4-5 years later, just get a term life policy for 5-10 years. You will get a lot more coverage.

To make matters worse, paying monthly has an additional finance charge vs paying yearly and this extra charge does not go towards increasing the death benefit or cash value.

JimTravel73 said:   I actually have (and used, sadly, for one) term life on my children, provided through my employer.

It was capped at $1,000 in the first year of life, and then $10,000 until age 18. $1,000 is enough to provide for typical burial and/or cremation expenses for a very young child.

But the premium: $15 annually, covering all children until age 18.

We are also IVF parents.

ETA: My parents had a small whole life policy on me that I was asked to pay the premiums on starting at age 18.  I got tired of paying the bill several years back (the premium was $8 per month) and we cashed out roughly $6,300 after the policy had been in force for 40 years, which I split with my parents in proportion to our premiums paid.  That's a pretty small return given the time period, and that included reinvested dividends.

  Thank you for sharing this.  



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