Devils advocate here. My cousin had a child at 17 and I had mine at 42. We’re the same age. She purchased whole life. Her son is over 30 now and his whole life Insurance premiums total will be less than my current term total once he hits my age even after accounting for all the years as a child and the fact that I didn’t start paying till I was 28. Dunno if that’s unusual or not.
What makes their act of purchasing the ins so unique is at 2 yo his lungs were damaged due to pneumonia. He doesn’t qualify for cheap term ins even tho he doesn’t smoke (he can’t) and he’s young. Such cheap ins has been a blessing as there is no way he could have otherwise afforded term ins.
I agree for most people term is best. We have a free child rider on my term policy.
but add the expected cost of the ins over the child’s entire life to determine the break even point with term ins. Then see which is best.
If you’re in a position where you can pay cash for a funeral then maybe you’re in a position to help your child out by paying for whole life/Universal now so they can lock in a really low rate. You could set aside $4800 and pay for a $10 a month premium for 40 years with that amount. Now it’s been a while so I’m sure rates have gone up but the premise is the same.
I’m not an expert but if you prepay the ins when they are a child I don’t think the amount is counted in the gift tax amount. So for wealth distribution this is an excellent way to distribute funds above the $14k a year and also to give yourself peace of mind your future grandkids/ DIL or SILwill be taken care of. (Not every young couple with kids has the money to get life ins or if they do it’s easy to be lazy about it because the young always think nothing will happen to them.)