Million Dollar Baby: Building Wealth and Security for Your Child
- Utah Avenue Insurance
- Feb 28
- 4 min read
Meet Sarah and Mark, young parents of a one-year-old boy named Ethan. Like many parents, they dream of giving their child the best possible start in life—one that includes financial security, opportunity, and freedom. They’ve heard about the power of starting early when it comes to savings, but they’re not sure where to begin. That’s when their local Utah Avenue Insurance agent introduces them to the concept of a Million Dollar Baby Plan through an Indexed Universal Life (IUL) insurance policy.
Better coverage starts here, and for Sarah and Mark, it begins with understanding how a small investment now can secure Ethan’s future for decades to come.
Why Start Investing Early for Your Child?
Many parents wish they had started saving and investing earlier in life. Sarah and Mark don’t want Ethan to face the same regrets. By starting an investment for him when he’s young, they can harness the power of compounding interest and long-term growth. Even small, consistent contributions can lead to impressive financial outcomes over time. More importantly, this plan will offer Ethan not only financial security but also valuable lessons on the importance of planning and investing.
What is an Indexed Universal Life (IUL) Policy?
An IUL policy is a type of permanent life insurance that comes with a cash value component. Part of the premiums Sarah and Mark pay will be invested in an index, such as the S&P 500. The cash value grows as the index performs, but the policy also comes with a built-in safety net—if the market declines, their investment won’t lose value. Over time, the cash value can grow significantly, offering both protection and financial growth.
Why an IUL is Perfect for Ethan
Lifelong Coverage: The IUL policy will provide Ethan with life insurance coverage for his entire life, as long as the premiums are paid. This means even if he develops health issues later in life, he’ll still have coverage.
Tax-Free Retirement Income: When Ethan reaches retirement age, the cash value accumulated in the policy can be accessed as tax-free income through policy loans. This provides an incredible financial cushion during retirement, supplementing any other savings or retirement plans he may have.
Protection from Market Volatility: Unlike direct investments in the stock market, an IUL protects the cash value from losses during market downturns, offering peace of mind.
How the Million Dollar Baby Plan Works
Sarah and Mark decide to contribute $100 per month to Ethan’s IUL policy. Here’s how the plan could unfold:
Starting Early: With Ethan only one year old, the IUL policy has decades to grow and compound.
Consistent Contributions: Sarah and Mark plan to contribute until Ethan turns 18 or 21, at which point Ethan can take over the premium payments.
Growth Over Time: Assuming an average annual return of 6.5%, the policy’s cash value could grow to over $1.4 million by the time Ethan turns 65.
A Story of Financial Success: The Power of Compounding
Let’s imagine Ethan’s journey. By the time he turns 65, his policy has accumulated significant cash value, and he’s ready to retire comfortably. He can take out tax-free loans from the policy’s cash value—about $145,000 per year—without worrying about paying it back during his lifetime. This income will be completely tax-free, giving him an incredible advantage in retirement.
What Happens at Retirement?
Tax-Free Withdrawals: Ethan could take out $145,000 per year, tax-free, for over 15 years.
Total Retirement Income: By the time he reaches the average life expectancy of 80.6 years in Utah, Ethan would have received over $2.2 million in tax-free income.
A Lasting Legacy: After Ethan’s passing, the remaining death benefit—over $900,000—would be paid out to his beneficiaries, also tax-free.
Why It Works for Families Like Sarah and Mark
For many families, the Million Dollar Baby Plan is a way to provide their children with a financial head start, life insurance coverage, and a secure retirement plan all in one. The flexibility and security of an IUL policy make it a perfect solution for parents who want to ensure their child’s long-term well-being.
Recap:
Starting Early: Sarah and Mark invest $100 per month starting when Ethan is one year old.
Long-Term Growth: With an average return of 6.5%, the policy grows to over $1.4 million by age 65.
Tax-Free Retirement Income: Ethan withdraws $145,000 per year, tax-free, totaling over $2.2 million by the end of his retirement.
A Lasting Legacy: Over $900,000 is passed on to Ethan’s heirs tax-free.
Why You Should Consider an IUL for Your Child
Time is one of the most powerful factors in building wealth, and the earlier you start, the greater the rewards. Although an IUL policy can be purchased at any age, the cost of insurance increases as you get older, and the time available for growth decreases. While we can still build effective plans for those in their 20s, 30s, and 40s, the premiums will be higher compared to starting young.
Ready to Give Your Child a Million-Dollar Future?
At Utah Avenue Insurance, we understand that planning for your child’s future is one of the most important decisions you’ll make. Better coverage starts here, and we’re ready to help you design a plan tailored to your family’s goals.
📲 Contact us today to learn more and receive a customized illustration for your child’s IUL policy.
