How an unusual graduation gift helped one mother teach her daughter the importance of building wealth

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  • Ebony Ruffin’s mother gave her whole life insurance as a high school graduation gift.
  • She learned that life insurance can build wealth through its cash value component.
  • To build even more wealth, she later purchased an indexed universal life policy.
  • Policygenius can help you compare life insurance policies to find the right coverage for you, at the right price »

Women live longer than men, and women are the primary breadwinners in 40% of American households. A woman will most likely outlive her male partner and may also be a caregiver for elderly parents. This makes it especially important for women to plan in advance for how they’ll live and guard their health later in life.

As we celebrate International Women’s Day, Personal Finance Insider wanted to highlight women empowering each other — and helping each other build wealth in the process. In the words of Aretha Franklin and Annie Lenox, “Sisters are doin’ it for themselves, mothers and their daughters too.” 

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For Ebony Ruffin, founder of Ruffin Consulting Services, a business consulting firm providing life insurance solutions to families and businesses, an unlikely gift from her mother put her on the path to build generational wealth, and it even started her path in the life insurance industry. 

She received whole life insurance as a graduation gift

Shortly before Ruffin started college, Ruffin’s mother gifted her with a whole life insurance policy. “My initial reaction was, I’m going to college, not passing away,” Ruffin said, adding that at the time she didn’t fully understand the gift that her mother gave her.

However, as she majored in business administration and interned with financial services companies, she later realized the value and importance of the life insurance policy she received.

“Seeing the cash value accumulate in the account helped me understand the importance of permanent life insurance to build wealth,” Ruffin said.

There are two types of life insurance: permanent life and term life. Term life insurance lasts for a specified period, and when it’s up you can reapply for coverage, but the premiums most likely will go up as you age and your health deteriorates. Permanent life insurance never expires, has a death benefit for your beneficiaries, and a cash value that you can use during your lifetime. It’s like owning a home, where you gain equity that can be used as collateral — and your home can be left to your heirs leaving a legacy. 

You can take a loan on the cash value or use it as collateral during your lifetime. This is why permanent life insurance is considerably more expensive than term life insurance — it can help build wealth and be used as an investment tool.

Ruffin said her mother explained the importance of the cash value and how the funds were to be used: as liquid resources for starting a business or buying a second home. 

Her mother’s example helped her build wealth

Ruffin said she continues to reap the benefits of her mother’s good financial decisions. Following her mother’s example, Ruffin also bought her own permanent life insurance policy, an indexed universal life insurance policy. 

The whole life insurance policy that her mother purchased for her is more conservative than the indexed universal life policy because its cash value is managed by the insurance company’s portfolio, while the latter policy has the cash value invested in indexed stocks and bonds.

Ruffin said this is a riskier investment and not for everyone. However, she said that although she purchased her indexed universal life insurance policy seven years ago, its cash value is almost equivalent to the cash value of the whole life insurance policy that her mother bought her as a high school graduation gift. 

Life insurance isn’t just about a death benefit

Ruffin educates and informs clients that life insurance is a wealth benefit, not just a death benefit for your beneficiaries after you die. She said that insurance agents should perform due diligence with clients to assess their financial situation and risk tolerance to make sure they have the best coverage for them. 

She credits her mother for modeling financial responsibility and educating her on building generational wealth with that unusual high school graduation gift of whole life insurance.

For International Women’s Day, we honor all the women and mothers who pay it forward for younger women and their daughters by modeling financial independence and informing them the importance of owning their personal finances.

“The only person to take care of the older woman you will become is the young woman you are today,” said Barbara Pietrangelo, a certified financial planner and life insurance specialist with Prudential.

Ronda Lee is an associate editor for insurance at Personal Finance Insider covering life, auto, homeowners, and renters insurance for consumers. She is also a licensed attorney who practiced litigation and insurance defense.

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