Is birthday insurance worth it?

birthday card from grandmaJust when you think there is insurance for everything, Commemorative Life Insurance has come out with, "AfterThoughts Birthday Insurance" which will provide birthday cards and cash to your lovely little grandchildren even after you have left this world. The program is a whole life insurance policy with premiums ranging from $141 to $725 depending on age and tobacco use. While the thought of providing a birthday greeting for the rest of your grandkid's life may be appealing, providing them a gift directly is likely to make more financial sense.

Imagine for a minute that you are a 60-year-old non-smoking female and you want to make sure your grandchild receives a $100 check and a birthday card for the rest of his life beginning when you die. If you live another 20 years and pay in $141.26 each year you will have paid AfterThoughts just shy of $3,000. At a payout rate of $100 per year for his life your grandson the investment wouldn't pay out any profit until his 49th birthday, assuming you bought the insurance the day he was born.
If you had invested that same amount of money over a 20-year period in a vehicle with a 6% return you would be giving Johnny close to $4,000 when you pass away. Even if you have your son or daughter give $100 to your grandson on each birthday, the account would continue to grow into a fund that could help pay for college. Which of these do you think would cause your grandchild to remember you more, $100 every year to be spent on a video game or a nice dinner out, or giving him the means graduate with less debt?

While watching the video describing the service, I couldn't help but cringe as the CEO plays to the fear many elderly people seem to have of being forgotten, just to sell additional insurance that in my opinion isn't worth it. If you want to make sure you are remembered, spend some time with them as they grow up. I don't remember the birthday cards from my late grandparents. but I do remember Grandma and Grandpa Raitz every time I drink ginger ale, which was always in abundant supply at their farmhouse when I was a kid.
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