Life insurance as an investment can be a debatable topic in most conversations. Some say it is worth it; some say it is not. The most common argument is that the benefits of life insurance can be gotten from other types of investments — and those investments do not require people to pay hefty sums every month. Despite such valid concerns, there are still reasons you should consider getting life insurance.
Of course, before you embark on getting insurance, you should carefully consider the plan you will take. Will you get insurance with an expensive premium? Will its return will be worth the expense? Will you get your money once you retire? Or will you wait until something happens to you? Will you get many insurances? There is a lot to consider.
Life Insurance as an Investment
Nonetheless, here are the advantages you will get if you treat life insurance as an investment. Take note of them, and you will surely be glad that you decided to get life insurance.
Having permanent life insurance means that all the money that goes into it and the interests it accumulates are exempted from tax. Of course, this is the same for 401ks, 403bs, and traditional SIMPLE and SEP IRAs.
No Age Limit
Unlike other investments, you can make your life insurance investment grow until you die. If you think you can live over 100, then it is a must that you avail of life insurance. Of course, it will be a bit of a problem naming who will be your beneficiaries at that point. It is possible that your spouse and even your kids are already gone at this point.
It’s a Lifesaver
The primary purpose of life insurance is to give you help if you get into trouble or are facing death. When you are in such perilous conditions, the interest growth of your money becomes accelerated. Your beneficiaries or you can receive 25% up to 100% when you pass away or become stuck in a hospital bed. The money can be used to cover hospital and funeral expenses and leave a small amount to your loved ones.
Debt Payment Assurance
With life insurance, you can rest assured that your debts will be paid. You will not have to worry about leaving your family and loved ones with financial burdens. All the loans you had — auto, credit, and even personal — will be paid.
Life insurance easily equates to retirement money. It can be a way to save money while you are busy with day-to-day expenses and happenings. You can even use the money even before your retirement. You can use it to achieve your goal of traveling the world. You can even use it to start a business.
Aside from the monetary benefits it brings, you can have peace of mind if you have life insurance. With all the advantages that it will bring to your life and the security, it will provide you when you come to a point where you will be gone, the money you will spend on it is worth it.
Life Insurance Considerations
Be sure to consider the following:
1. The purpose of the insurance you will get
2. The type of the insurance you will get
There is two type of life insurance people typically get: Term Life Insurance or Whole Life Insurance. Whole life insurance insures the person as long as he or she is alive. The money that goes to this type of insurance accumulates and builds cash value. The cash value is exempt from tax, and this is often called permanent insurance.
The payment for this type of insurance will be the same throughout the insured’s life. The insured can also take a loan from his or her life insurance. If the insured has stopped paying his or her premium, the insurer will end the insurance and give the insurer his or her money.
On the other hand, term life insurance has a set period when the insurance in effect. Typically, term life insurance lasts for 10 or 20 years. Its premium rates are also fixed; however, the insurance policy does not have any cash value. It is an excellent investment if you want to secure the finances of your heirs or family members.
An uncommon type of life insurance is variable life insurance. It is similar to whole life, but you can invest some of your premiums in a different investment account. Another unique type is universal life insurance. It is flexible compared to the earlier three categories. You can adjust a number of your premiums. And you can also change the insurance’s face value.
In a Nutshell
Your priority in life determines the value of life insurance as an investment. If you want security for yourself and your family members, life insurance is a must for you. If you want to focus on generating money in a short amount of time through investments, then you should try other investment avenues.