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How to Leave 1 Million to Your Children

Have you ever asked yourself how much money your loved ones will get when you pass away? By acting early and working on it all your working life, it is possible to build an insurance policy worth up to $1 million. However, when you want to ensure that a policy will remain in effect at retirement, the goal becomes much less achievable. The price of keeping the policy in effect for a very long time becomes unaffordable for many people.

Every situation is different and there is no one solution that will suit everyone. Here is an example of a client who had set a goal of leaving $1 million to his family when he died. Why the million? He and his wife had discussed having three or four children, and he hoped to leave a few hundred thousand dollars to each of them.

Initially, the client had a 20-year term life insurance policy to cover his debts and ensure that his family was protected in the event of a tragedy. He first looked at how to keep this policy, only to find that he could not renew it because the price increases dramatically in the 21st year, and again in the 41st year.

The other option was to convert his current policy to a permanent policy, meaning he could change it from a term policy (that renews every 20 years) to a locked in or level premium life insurance (premium stays the same through the life of the policy). However, he probably couldn’t afford it yet, because depending on the age at which he would make the conversion, the price would exceed his budget.

However, there is another option for this client: Permanent Insurance. Instead of covering himself (at an older age), he could cover his children’s lives (at their young ages) to provide the legacy he wished to leave behind. By taking out a policy on his children using the Participating Whole Life Insurance Policy, he could create wealth for three generations: his children, his potential grandchildren, and himself.

With this strategy, he invests the equivalent of the price of a car, over 20 years. His children will then have a policy with a potential cash value of $250,000-300,000 upon retirement. As a bonus, they will be able to transfer that wealth to their own families through the death benefit, estimated at over one million dollars.

The Participating Whole Life Insurance Policy has several advantages:

  • The policy provides a cash value that can be used or paid to the client’s children if they need financial support while the client is alive.
  • The Cash Value and the Death Benefit will continue to grow over the children’s lifetime.
  • Since he owns the policy, he can benefit from its cash value until he transfers ownership to his children when he retires. THEY MUST NOT CANCEL THIS POLICY.
  • There are various options to access money within the tax-free policy.
  • With this policy, the client creates wealth for 3+ generations and offers a solid strategy for future generations.

Every situation is unique and no solution is tailored to fit everyone’s needs. In the context of this client’s situation, this turned out to be very advantageous.


Mathieu Vachon
Investment & Insurance Advisor
Alliance Wealth Management

Planning. Achieving. Together.

Alliance Wealth Management is a program offered by Credential Financial Strategies Inc. providing financial planning, life insurance and investment services to members of credit unions and their communities. All trademarks of Alliance Wealth Management are used under licence by Credential Financial Strategies Inc.

This article is provided as a general source of information and should not be considered a personal investment advice or solicitation to buy insurance. The views expressed are those of the author and not necessarily those of Alliance Wealth Management. Please speak to your Alliance Wealth Management Representative or personal financial representative before making any financial planning decision or implementing any strategy.

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