Are You Maximizing Your Child's Savings Potential with IUL?

What is the best gift that you can make to your child or grandchild? A gift that will last a lifetime – savings!

Would you like to ensure that your child or grandchild will be set up for the biggest events in his or her life and have a very good retirement?

You can set up the child in your life for College, Wedding Day, Buying A House, Retirement, or any other major event in his or her life by starting to save early in their life, using the power of compound interest, time, and a powerful insurance tool. This can be accomplished by just giving up your Venti Starbucks coffee that you have every day and using that money instead to open up an interesting saving plan for that child in your life.

Start Saving as Early as Possible for the Children in Your Life

The earlier you start saving money and you let the compound interest to work in your favor, the more money you will have accumulated into a savings account. We are not talking here about a regular savings account that you will get from a bank. That account doesn’t cover the inflation. Let the rule of 72 work to your advantage. This will be the gift that keeps on giving.

Would you be willing to give up your everyday Venti Mocha from Starbucks for the next 20 years to guarantee that your newborn baby will be a multi-millionaire by the time they retire? Every day, instead of spending 6 dollars for coffee, put that money into a piggy bank. At the end of every month pull the money out and make a payment into a tax-free retirement plan like an Indexed Universal Life Insurance (IUL). You will see the magic happen. To learn more about an IUL, click here.

Understand the Power of Compound Return Mixed With the Right Amount of Time

To see the magic, we will write down an example. For this example, I will use a very conservative 6.25% return. After 20 years of contributions, you would have contributed to that account $43,200 by saving $6 per day. With the 6.25% return, that account will have a value of $84,363 after 20 years. Some people might say that that is not too much. 

Now, after 20 years, your child is in college, and you can’t continue contributing the $6 per day. Let’s say your child didn’t learn from you the value of saving for retirement and doesn’t want to continue to put money into his/her account, but he/she leaves the money there to grow. They have no choice because you, as the parent, don’t relinquish control over that account until you ensure your child thinks on his/her feet. By the time he/she is 65 years old and retires, that account’s value is $1,394,554. Mind-boggling, right? In the first 20 years, you invested $43,200, and no other money has been added. When your child retires, he/she will have $1,394,554, with a conservative return of 6.25%. 


Let’s assume that your child follows in your footsteps, understands the value of compounding interest, and continues the tradition of saving that 6 dollars daily, religiously. He/she will have in their account by the age of 65… $1,934,080. Do you think your kid will have a stress-free and happy retirement? Between you and him/her, the amount of money that will have been contributed during the 65 years is only $140,400. Not bad for giving up a luxury cup of coffee a day. Do you understand how much that cup of coffee actually costs you? 

Think about all of the other things you pay for and you don’t really need. Check out our series of 3 web classes: Winning at the Game of Money which explains the time value of money.

Look at it and then pull your bank statements for the past 3 months. Sit down with your significant other and figure out what you spent each month on things that are not totally necessary. Add the total for all 3 months and divide it by 3 to figure out with approximation the amount spent on unnecessary things. Then go to and work with the Compound Interest Calculator and see the future value of your money if you were to put that money into a compound interest account. It is very easy to figure out on your own how powerful compound interest is in your particular situation and if it is used in your favor. I can guarantee that this will be an eye opening exercise for you and your spouse. You will look at saving for retirement in a totally different way.   

The tool that we propose for you to use is an Indexed Universal Life Insurance or short an IUL. With an Indexed Universal Life Insurance (IUL), you will get a tax-free retirement income and even though you participate in the growth of the market through an index, your investment is protected against major market downturns through the floor rate. 

This is the only compound interest saving, tax-free plan you can open for your child. Since you will not send your 5-year-old out there to work in the corporate world, I don’t see them qualifying for a tax-qualified retirement plan. 

Although the above projection does not consider the death benefit costs and maintenance costs that an IUL has, you can see the power of compound interest. Let’s say your child will not retire with $1.9 million in his/her cash-value account. Still, with $1 million tax-free and with a good-sized death benefit for his/her beneficiaries, that will also be tax-free and guaranteed even if he/she passes away at 120 years of age. All of this is for $6 a day and a very conservative rate of 6.25%. *

Until now, we have covered the retirement advantages of an IUL; please keep on reading to understand how, by using an IUL for your child, you can cover some of the biggest events from your child’s life.

*There are no guaranteed returns in IUL’s. This is for illustration only. 

Who Is the Policy Owner?

Do you think he/she will have a comfortable retirement, even with the inflation rate? Can you see what that cup of coffee is actually costing you and your child’s future?

You might be asking what will happen if my teenage son or daughter goes into a rebellious phase, ravages the policy’s cash value, and runs away from home. 

Well, the child is insured, not the owner. You can transfer ownership whenever you think your child has become responsible and you see him/her saving for themselves.

Why IUL?

You might be asking why an IUL and not other retirement vehicles?

First of all, an IUL provides a tax-free retirement. Your kid will not have to share with Uncle Sam their millions that have accumulated in their cash-value account. 

Second, the payments into this IUL account are totally flexible. Let’s say your child will run into some rough times and they will not be able to afford to even save the $6 per day to go towards that account. They don’t have to make that payment.

The third and probably the most important feature of an IUL is that you can borrow money at 0% interest against the cash value. You can borrow money for anything you want in life, be it for college, a wedding day, buying a house, etc. 


This loan doesn’t eat away from the balance you have in the cash value, hence being called a loan. That cash value will continue to grow by compound interest. The loan doesn’t have to be repaid until your child passes away at an old age. In that case, the loan will be paid from the death benefit. Once you understand this concept, you will kick yourself for not doing this sooner. Or feel like kicking your agent for not telling you about it. 

Why Should I Save With a Product That Has a Death Benefit?

You also might be asking: some of the money will go towards paying for a life insurance benefit. Isn’t that going to eat from the cash accumulation?

First of all, the life insurance cost (death benefit) is based on a child’s age and is very inexpensive. A tiny portion will go towards the death benefit. Later in life, in the retirement years when the cost of insurance will go up if the account is structured right, your children will have enough money accumulated to be able to pay for that death benefit and have plenty of money to live their retirement years in style, traveling the world or doing whatever they want to do in their retirement years.

Second of all, they will afford a large enough death benefit to leave to their beneficiaries along with any cash value that your child has not spent. Hopefully, your child will continue the tradition and will save money for their kids. That’s how generational wealth is being built.

Third, if there were a better tax-free retirement product that is not attached to a death benefit and is protected against market crashes, we would tell you about it. There is the Roth IRA, but it has its drawbacks, the most important being the fact that it doesn’t offer protection against a market crash.

Are You in for the Long Haul?

A lot of people are flabbergasted when they realize how much money can be saved in a lifetime through the power of compound interest. 

The majority of wealthy people are using it to create generational wealth. Most people can’t believe how easy it is to save so much money for a tax-free retirement. IULs have been created for long-term savings. 

As we have said on the home page, if you are looking to grow your investments exponentially overnight, this website isn’t the place for it. There are “gurus” out there that can teach you about risky investments. We teach you the safer ways of saving for your future.

With an IUL, you need at least 12 to 15 years of contributions toward the IUL account. If you can do that, the IUL will work perfectly for you. The longer and the more money you can contribute, the better results you will see. The most significant factor is the time you have for the money to grow.

What if the Economy Takes a Downturn?

There are no guaranteed returns in IUL’s. Remember that IULs are tied to an index. The index is closely tied to the growth of the US Economy.

There might be years when there is a downturn in the US economy, and the only thing you are sure of is that you will not lose money with the guaranteed floor rate of 0%. The most used index in IUL is the S&P 500, even though there are IUL products tied to different indexes or a mixture of indexes.

You can do the math yourself with different projections and at different rates and monthly amounts. Do your homework and see historically what returns different indexes have had. Join our financial webinar that we have created to learn more about building wealth for you and your children.

What Are the Requirements for an IUL for a Child?


There are simply 2 requirements for an IUL policy for a child:

  1. The parent has to have a term life insurance policy, too and the death benefit has to be double the amount of the child’s death benefit in the IUL. It can be only an inexpensive Term Life Insurance with or without Living Benefits (the insurance companies our partners represent include Living Benefits without charging extra for it)
  2. If you have more than 1 child, all of the children need to have identical IUL policies set up.

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Last updated: [8/17/2023]

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