A well-known insurance company offers a policy known as the \"Estate Creator Six

Question

A well-known insurance company offers a policy known as the "Estate Creator Six Pay," Typically the policy is bought by a parent or grandparent for a child at the child's birth. The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company. No more payments are made after the child's sixth birthday. When the child reaches age 65, he or she receives $250.000. If the relevant interest rate is 6 percent for the first six years and 7 percent for all subsequent years, is the policy worth buying?

Explanation / Answer

It's going to be a long time until the child is able to reap the benefits of this policy, and there's no telling what could happen to the company in that time.

I would suggest that if you would like to invest in the child's future just speaking with your bank/credit union about options for a college fund. That way it would be more immediate to the child, and rather than pay money for him/her to enjoy retirement, you could help get them through school so they can get a nice job and pay for you to enjoy your retirement ; )

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