Using Life Insurance As A Down Payment On A House
What if I told you that life insurance can be a planning tool for putting a down payment on a house? Many years ago I can remember my father during the peak of his working career, assuring me that when the time came there would be no issue in lending me some money for my first house as a down payment. Always keeping this in the back of my mind, I really didn’t save for a down payment. Sure enough when my wife and I finally got the bug to start house shopping, my father’s financial situation changed and we found ourselves stuck and scrambling to come up with the funds when we finally found the first dream house we wanted to buy. I made a promise to myself that I wouldn’t let that happen to me again, and especially not to my children.
When my twin boys were born, I immediately decided I wanted to purchase permanent life insurance policies on them for two reasons. First and foremost was to lock in their insurability. Should they ever develop uninsurable conditions, at least I would have peace of mind knowing they had some coverage in force. The second was to be able to give them the down payment for that house when they needed it.
It’s amazing what time will do especially with the cash value that can build up inside a permanent life insurance policy.There are several different types of permanent life insurance, but a variable universal life policy has the most aggressive internal rate of growth on the cash value. With a small death benefit face amount, you can contribute as little as $100 a month and potentially grow that internal cash value to be as high as $20,000.
So as I watch these policies grow for both of my boys, I get excited knowing that by just sitting back and letting that internal cash value grow, I will be able to hand those policies over to them when they need them most. They can either decide to continue to contribute to them and potentially use them as supplemental retirement income in later years, or loan against the cash value for the down payment on their first house!
About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com