My stepmom has offered to pay for life insurance for my two daughters. When she sent me the paperwork to sign she listed herself as the beneficiary! Is that weird that it wouldn't be me as the beneficiary?
Such quick responses, thanks mamas! My husband thinks it's fair because she's paying for it, but I think it's weird. I hate to question someone's motives, I just hope it's a case of her not knowing better. I called the company and they said it's unusual for a grandparent to be the beneficiary, since it should be someone younger, technically. And they said there can be two primary beneficiaries. So here goes the uncomfortable call to tell her! :( thanks again everyone for your insights and advice!
Ugh...so I told her I would do it if she also named me on the policy, and she said that was basically a slap in her face and that I could pay for the policy myself if I wanted to be on it. I told her right back that an offer of help shouldn't be conditional. It's okay to help me if you're in control of how you help? No help needed, THANK YOU! =(
Eeew, that's wierd! I like the savings account idea... maybe you stepmom would go for that. I would just thank her for her generosity but tell her that you've decided to go in another direction. Really, eeeeew!
Totally weird. That's going to be a hard one to approach, but maybe you can talk to her about these things?
It's that generation.
Baby life insurance is a rip off--a really bad deal. Set up a 529 plan for your daughters and your mom can make deposits into that instead of something that will be worth virtually nothing someday.
NO WAY! That means she wants to benefit monetarily from the death of your daughters? That seems mighty strange. Thanks for the offer but does she think that is doing you a favor? How about taking out a life insurance policy on herself and putting the girls as beneficiaries? Don't sign.
There are certain types of life insurance that are a good tool in a financial plan. Getting cash value life insurance for your child is not a bad idea - it's just a piece of a larger investment pie. The idea is that the insurance is there if needed, but it generates cash value in the neighborhood of a bond's level of return. You leave the insurance alone and when you retire, you still have insurance AND you have cash value that can be used. Having life insurance when you're old frees up other assets because you can leave $ to your kids regardless of whether you use up your assets. That's the idea, anyway :)
I'm not an attorney, but it seems that you should be the primary beneficiary and she should be the 2ndary.
Dave Ramsey says the Gerber life insurance thing is totally a rip off and unnecessary.
This whole thing sounds a little fishy to me!
I would ask a professional (maybe even email Dave Ramsey.com for further assistance)
Good luck
From what I have read/heard/gleaned/learned over the years... about the only time something like that (not necessarily Gerber, but an infant policy that is anything specific to the child and not just a "dependent" type rider on a life insurance policy through your work/spouse's work) about the only time that makes any sense at all, is if your child is in some way handicapped, and that you anticipate that they may not be able to obtain insurance on themselves in the future due to their handicap or condition. Of course, ALL of that may change once Obamacare kicks in......
The only reasons for life insurance in the first place, are a) to replace a lost income stream b) to cover expenses that would be generated by the loss of a person (i.e., you are a SAHM, but if you died, your hubby might need to hire a nanny to take care of your kids while he works, and that would have costs associated with it), and c) to cover funeral expenses.
So, for a child, you wouldn't need to consider any policy over and above the cost of a funeral for that child. (If you don't have any ideas what that might run.... lets just say that the minimum for an "average" funeral STARTS at around $6,000-$7,000).
I would assume that grandma is just clueless about beneficiary language. Or maybe it is something that she only intends to do for a short period of time and then take the cash value later or something (which is BAD investment advice, btw). I would assume whatever she is doing that seems "wrong" is just out of ignorance, and nothing more. Maybe you should try to find out what got her started thinking about it.... her agent MIGHT be playing on her emotions to make a sale.... you never know.
It's weird:( It should be you so that you can pay for a funeral. You don't want any more insurance than what it would take to cover funeral/interment costs. You won't be losing income from a child if they were to die, so you don't want to pay for gobs of coverage.
To me an insurance policy on a child is for the purpose of covering the cost of a funeral ( which can be very expensive). I agree with the comments about maybe she thinks that is helping. I would talk to her and maybe she would want to contribut to a college fund instead. I noticed you live in WA. Wa has a GET program for college.. Maybe she would consider that.
Yikes - probably nothing, but that is a bit creepy. I never really got why children need life insurance. Most adults don't need life insurance. Why don't you suggest a Education IRA instead. Don't know much about Gerber, does it pay for college? Interesting dilemma.
Positively,
M.
How did the conversation go? She will likely be pissed off if you tell her "no". However, that's all the more reason to say "no".
Instead of thinking about life insurance, I'd encourage you and your husband to start thinking about paying for college instead. It's likely that the kids will out-live both of you. Because your intuition is telling you that IT IS WIERD... don't dismiss the thought that someone could have something sinister in mind. Keep the kids away from her. I sure hope you don't let her get the life insurance, and as someone else mentioned, make sure she doesn't have their SS#.
**Just read your Edit:
Just because your Step Mom is paying for it, it does NOT make it "fair" as your Husband said.
I think its weird.
Why make herself the beneficiary?
I would not sign.
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Um yah, that is weird.
She should not be the beneficiary.
It is not for her to decide... these are your children.
And what does your Husband think?
This is a parental decision.
For any account your children have.
Do NOT give her your kids Social Security numbers either... otherwise, she can create ANY kind of account, using them and their PRIVATE information. And you may not know.
She should NOT be telling you to just sign it without your opinion. She should have discussed it with you/Hubby first... and then go by your wishes.
DO NOT agree nor sign.
Why on earth would one purchase life insurance through a baby food company?
No, seriously - check our Dave Ramsey's website and listen to what he has to say about a company like this selling life insurance.
And yes, it is weird that she listed herself.
Complete weirdness all around
Good luck!
Most financial experts will tell you that this is a waste of money. They have a point, because they beleive that in the very rare event that if your child should die before the age of 21, you would have more than enough money to pay for the funeral costs. In my case this was not true. I bought the insurance for my children, it only cost $30 a year.
I don't think it's strange that she wants to list herself as the beneficiary since she's paying for the policy.
I just read some of the responses and disagree with many of them. Catherine C. has brought up a good point that you can purchase life insurance on anyone. It is very common for grandparents to purchase life insurance for their grandchildren (listing them or their children as beneficiaries). Several people have told you don't sign, you will not be required to sign anything since legally it has nothing to do with you.
I also think it's a little strange, and something she should have discussed with you. I would tell her you want to discuss why she wants to do this, and find out tactfully why she wants to be the beneficiary. If it were me, I would say that we have life insurance for our children through work (I do, but would probably lie if I didn't), and suggest, like others, that you have started a college fund and she could put the small premiums towards that, instead, which would be guaranteed to be used and deeply appreciated by your whole family. GOOD LUCK!
We have gerber life insurance for our children. Just a heads up here the policy is pretty much just enough to pay for a funeral. Have you discussed this with her? is this what she is planning? if not then I would say no. You personally could get the insurance for your kids. It is a $10,000 policy and it is $25 a year total. I have had them for all 4 of our children since they were born. when they are older and hit the milestones you can add more insurance and pay more but for now its $25 a year. I wouldn't like anyone else to be the beeficiary of my kids.
Yes, I do find it weird. I just found out that my MIL have a life insures of my husband, where she is the beneficiary. I would understand that when he was single but he is married and we have 2 kids, I would think she would put it in our kids name. I know she is paying it for it but to me is also weird. I would find weird if my own mother gets a life insures and put her self as beneficiary and I don't think she is bad person at all but I think is just weird.
The fact that she got so offended when you ask to be in the paper just look fishy, I think you did very good!
there are so many better ways to "save" money for in case of an emergency.....i would look into other options becuase gerber life ins is a waste of money, its like a term policy that doesn't grow monetarily......
all our policies require 2 beneficiaries, is there a 2nd on this? if yes then you should be listed....but i am curious why you didn't ask her why she is listed as beneficiary? did you know why she wants to take out the policy in the first place? .but as you stated "i hate to question someone's motives" just means that you think she has evil tendencies which sounds weird & scary & if this is the case then I would not allow her near your children
In order to set up this kind of plan you will have to give out your baby's SS number. Don't do it. Always set that kind of stuff up yourself and then tell grandma she's free to contribute to the account and give her the deposit information so she can drop money in when she wants but isn't in contact with anything that would involve withdrawing the cash or having access to your daughters personal information.
My mother used to use my SS number to open credit cards so she could hide bills from my father. I didn't discover it until I tried to get my own first apartment. She didn't run my credit into the ground or anything but it was just not cool. I had all those accounts removed as soon as I could but I would never trust her with my daughters SS number, ever. Protect that number. It's your child's identity and it's easily exploited.
Generally speaking, it's not a great idea to insure a liability. You should only insure assets (house, car, people who earn an income or take care of the kids). As odd as it may sound, children are a liability because they do not earn income, and they only cost money - therefore, if the worst should happen (god forbid), you would not lose any money. If that makes sense.
That said, insurance agents always try to tell you that a whole-life policy is just like a savings plan. Well, sure, except that you get a terrible interest rate. If your stepmom would like to set money aside for your kids, perhaps she could open an education savings account for them. It would be worth more in the long run and may provide some tax advantages.
As an aside, it is legal and it's even an investment strategy to buy life insurance on other people (even people you don't know, believe it or not). However, buying life insurance on children is not a strategy that is likely to pay off financially. I think your stepmom just probably doesn't know any better and her insurance agent talked her into it.
I think it is weird. She could be joint on it, but taking life insurance out on children is to help pay for burial services (which is the responsibility of the parents), not to get a pay check.
if you are uncomfortable - why don't you just say no...
If you cant afford a funeral, then why are you having children? No to children's insurance.
