A client with five kids, ages 9 to 19, wanted to put $200,000 a year into whole life policies across the whole family: him, his wife, and each child. He was deciding between two ways to split it, so I built the comparison and shared it in a video on this family's plan for him to rewatch.
Option one put $75,000 a year on each parent and $10,000 on each child. Option two put $50,000 on each parent and $20,000 on each child. Both used designs built for high cash value. In year one, option one carried $9.8 million of total death benefit and option two carried $13.4 million, because insurance on a child costs far less per dollar of premium than insurance on an adult.
On cash value alone, option two pulled ahead. At year 20, option one projected $3.2 million across all seven policies, and option two projected $3.4 million. At year 40, it was about $7.58 million against about $8 million. Younger insureds get more years of compounding, and the insurance underneath costs less.
The answer changes if the parents die early, so I added each parent's death benefit to the kids' cash values at different points. If both parents died in year 20, option one would leave the family about $6.3 million and option two about $5.5 million, so option one was $800,000 ahead. At year 40, when the parents would be 83, the totals were about $9.35 million and $9.26 million, so option one was still ahead, by about $90,000. The longer the parents live past that, the more likely option two comes out on top.
More premium on the parents puts the death benefit where it's likely to pay first. More on the kids puts the compounding in the generation with the longest runway. This family was healthy, so it came down to which way they wanted to lean, and I left that decision with them.
The younger kids' policies also showed a little less cash value per dollar than the older kids'. Children under 18 generally qualify only for a standard non-tobacco rating, which means they miss out on the better rate classes adults can earn. Underwriting doesn't run the full medical testing on kids that it does on adults. The amount of coverage you can put on a child is also capped, usually based on the parents' own coverage, as covered in how much life insurance you can put on a child.
None of these figures are guaranteed. They're projections built on the dividend scale at the time, and dividends aren't guaranteed.
A family weighing the same choice can have its total premium illustrated both ways. In this family's numbers, the kids-heavy version needed both parents to live past about 83 to come out ahead.