Why Not Give A Lasting Gift To Your Children This Holiday?

As Thanksgiving Day approaches, Black Friday and Cyber Monday deals start to abound, getting us to start shopping for Christmas presents for the ones we love and care about.

I want to offer a slight change in perspective.

I’d like to point you to a gift that lasts for the children, and even adults in our lives.

What if instead of spending on “physical” presents for your children or grandchildren, you save it, or at least some of it, into something that will multiply as they grow?

Just hear me out for a second.

What is a gift that lasts?

The holidays are a time of giving and as parents, we want to give the best to our children, right? We can certainly give them a concrete object that will make them happy for the time being, but we can also ensure a bright future for them in the form of a saving plan… that we and our child can fund together, watch it grow, and use for various things.

This gift will last longer than any toy they could ever possibly want. My experience with my own children, is they only play with new toys for a few days, and if we are lucky, a few weeks. Then I’d put them away and later donate them to Goodwill. If instead, that money was put in an IUL, it grows 10x its worth in the same amount of time!

What is an IUL?

An IUL or Indexed Universal Life is a type of cash-value accumulating life insurance plan that grows tax-free according to the index it is following. The money is protected from market risk because it is not directly invested in the stock market.

It is not an investment because an investment can fail and there is no certainty it will last. An IUL is a gift that will last a lifetime.

Before I heard of IULs, I already had a 529 for my daughter. So I immediately wanted to know what the differences are.

529 vs IUL

529s are college savings plans often offered by states because you may get a state tax deduction on the money you save there. But the catch is you can only use the money in a 529 for eligible college-related expenses.

While I love that, what happens if I happen to need money for other things that the 529 doesn’t consider eligible? I will have to pay taxes.

Personally, I’d rather forgo the tax deductions for the other benefits that I can get from an IUL.

See the infographics below comparing the difference between 529 and IUL plans.

I love the flexibility of the IUL because, in it, the money is not restricted to just college expenses. The rest of the money not used for college can be used for other things. This is where I save for my children.

Encourage financial literacy with our children

Talking to kids about what or how we choose to buy and not to buy (in simple terms they can understand), models good money management. It empowers them to make positive buying and saving choices on their own, even as young as 4 years old. If we approach it in a positive way, they will not feel like they’re missing out.

If you already have an IUL for your child, it shouldn’t stop there. Be sure to review your policy and show the child (again in a way they can understand) what it’s doing for them. Talk about the possibilities of what the money can be used for. You can call it a college fund, nest egg, or dream fund. It can be used for any or all of the above.

And most of all, don’t be shy to tell them the reason behind it- that you love them and you want the best possible future for them!

If you want to do something different and truly special for your child, grandchild, niece, or nephew this year, and give them a gift that will last a lifetime, something they will remember for the rest of their life, schedule an appointment immediately and I will help you get it started.

***The Holidays can be difficult for those who have lost a loved one. Read Coping With The Loss Of A Loved One During The Holidays.

Sheilla Vidal is a Retirement Income Certified Professional RICP® and life insurance broker. Sheilla is also a physical therapist, wife, mother of two, and one of the caregivers for her 85-year-old father. She is an avid learner.  She writes, speaks, and recognizes that her work in helping clients live with dignity is her God-given mission.