Should You Use Life Insurance As An Investment
Its possible to consider life insurance to be an investment if you have a policy that builds cash value. Cash value policies are generally touted as another way to save or invest money for retirement. These policies help you build up a pool of capital that gains interest. This interest accrues because the insurance company is investing that money for its own benefit, much like banks. In turn, they pay you a percentage for the use of your money.
But its important to consider the rate of return that you might earn. If you take the money from the forced savings program and invest it in an index fund, for example, you may realize better returns. For people who lack the discipline to invest regularly, a cash value insurance policy may be beneficial. A disciplined investor, on the other hand, could generate higher returns by putting the money they would pay toward premiums in the market.
It Can Cover Funeral Expenses
Funerals can be expensive. Dealing with this financial stress can add to the emotional stress your family might experience. Your family could use some of the death benefit from your life insurance policy to help pay for these costs. To do this, the beneficiary of the policy could direct some of the death benefit to the funeral home, or they can pay out-of-pocket and use the death benefit as a reimbursement for these expenses.
Who Needs A Term Life Insurance Plan
If you have loved ones who are financially dependent on you like partners, children, siblings or parents then buying life insurance coverage is absolutely worth it. Even if you dont have financial dependents yet, life insurance can be a valuable solution for making death easier on a family The payout from a policy can help cover financial obligations like funeral expenses or help pay your outstanding debts, if any. It can be your financial legacy.
A simple way to understand if you need term life insurance is to use an online life insurance calculator. It will take into consideration your age, income, family structure and more to provide you with a personalized recommendation. A life insurance calculator will also tell you if you dont need coverage at all.
In short, term life insurance is a worthwhile way to help financially protect your loved ones. A policys death benefit could help:
- Replace lost income and pay living expenses, like rent or a mortgage
- Pay debts you leave behind
- Provide for your kids care if you are a stay-at-home parent
- Pay for burial, estate taxes and other final expenses
- Fund college costs
- Pay unpaid medical bills or taxes
- Create an inheritance
For a small amount of money, you can support your familys financial well-being even after your death and if you need another incentive to become a life insurance policyholder, remember that the death benefit your chosen beneficiaries will receive is typically tax-free.
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Why Do I Need Life Insurance
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Life insurance is one of the most selfless gifts you can give to the people you would leave behind if you pass away.
Life insurance is not as complicated or expensive as many people may think. So rather than view it as such, consider what it could mean to your loved ones someday if they lost you and think of it instead as a potentially happy ending to a difficult situation.
Here are five important reasons why life insurance is important.
Best Rated For Financial Strength & Best Riders: Haven Life
When buying life insurance, its important to pick a policy that can be customized to fit your personal needs while also providing you with peace of mind for years to come. Through Haven Life, you can check both of those boxes.
Haven Life offers a number of rider options to choose from, so you can build the coverage that suits you best. One rider option is a waiver of premium , which means the insured wont have to pay premiums if they are totally disabled due to illness or injury.
The next is an accelerated death benefit, which allows the insured to collect a portion of their policys death benefit while still living, if they are diagnosed with a terminal illness. With guaranteed renewability, a policy can be renewed at the end of its term no matter what, even if the insured becomes ill.
Lastly, Haven Life Plus is an add-on rider that offers the insured access to a variety of helpful benefits and services including MinuteClinic access, Aaptiv enrollment, and LifeSite storage.
Haven Life term life insurance policies are available to applicants ages 18-64, for coverage up to $3,000,000 . Products are offered in all 50 states and the District of Columbia, with all policies being backed by MassMutual, an A++ rated insurer from AM Best.
Quick facts about Haven Life:
- Available in all 50 states and DC
- Up to $3,000,000 in coverage offered
- InstantTerm gives immediate coverage for qualified applicants age 59 and under
- Multiple riders to choose from
- A++ rating from AM Best
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You Have Extreme Hobbies
If you’re a thrill seeker with a penchant for extreme sports, you’ll probably be deemed higher-risk by a life insurance company. But it’s similar to having a high-risk job you’ll pay more to be insured, but the cost is worth it considering the likelihood you’ll die from unnatural causes.
If you do have an extreme hobby like rock climbing, scuba diving, or something equally thrilling it’s best not to lie about it on your life insurance application. If you die within the first two years your policy is active and you didn’t disclose your regular high-risk activity, the insurance company has the right to decrease the death benefit, or cancel it all together.
As for the cost, you’ll typically see either a higher base premium or an extra annual fee calculated as a percentage of your coverage amount. Every insurance companies assesses the risk of hobbies differently, so it’s good to comparison shop if this applies to you.
To maximize the benefits of life insurance, it’s wise to include a financial advisor, accountant, and estates attorney in your decision-making process to ensure you have proper coverage that adapts as your life changes.
Why You Should Lock In Your Rate On A Private Policy As Soon As Possible
Earlier I talked about the risk of developing a health condition before you lose your job, and how that can complicate your ability to get a private life insurance policy. But theres another much more common reason why you should want to purchase a private life insurance policy, and do it right now:
Your life insurance premium will never be lower than it will be today.
Thats due to the simple fact that age is one of the major factors in determining life insurance premiums. If you are 30 years old right now, the premium on a private policy will be much lower today than it will be when youre 40 or 50.
By locking in the premium rate on a long-term term life insurance policy now, you will spare yourself both the higher premiums that will come with age, and the possibility of being declined for poor health.
Im ready by the phone any time youre ready to move past I dont need more life insurance Im covered at work. That assumption could be hazardous to your familys financial health.
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Finding A Good Deal On Life Insurance
Your life insurance premiums are based on the level of risk you present to an insurer.
Someone who is young and reasonably healthy presents less risk, so their insurance premiums are likely to be lower.
Someone who is taking out a higher level of cover, has a dangerous job, or smokes may present more risk.
In this case your premiums may be higher.
Life insurance premiums are usually based on:
- Length of time for the policy
The good news is that life insurance is a competitive industry.
If you shop around, you will quickly see that there is a wide range of price tags on life insurance.
To find a balance between the premium you pay and the cover you want, compare your options.
If you buy the first life insurance policy you come across, you could be paying too much.
Save yourself time by using our comparison tool, which lets you compare prices from a panel of insurers.
You’ll get a quick snapshot of prices, along with support from one of our qualified life insurance advisers.
Get started today – you could have a policy in place sooner than you think.
This guide is of an informative nature only and not representative of Compare Club products. It should not be taken as medical or financial advice. Check with a financial professional before making any decisions.
It Can Build Cash Value Over Time
Permanent life insurance has a cash value or cash-surrender value, which means it can build cash value over time in addition to providing a death benefit to your beneficiaries. Just like most retirement and tuition savings plans, cash values can accumulate on a tax-deferred basis and be used in the future for any purpose you wisha down payment on a home, college tuition or even income for your retirement.
This can be a good option as the borrowing rates tend to be relatively low and its not dependent on credit checks or other restrictions. Keep in mind, though, youre ultimately responsible for repaying any loan as set out, to make sure your beneficiary receives the death benefit you had envisioned for them.
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Insurance Through Work Isn’t Enough
Scott and Trish were happily married with two kids. Scott had a great job that he loved and was pulling down $150,000 a year. His employer provided two years’ salary in life insurance, which Trish thought was sufficient until she talked to a friend of hers who was an insurance agent.
Her agent friend warned her that any coverage through work is always a nice bonus, but its never a good idea to rely on it. In the event that Scott were to quit, be fired or be laid off, his life insurance coverage would go away, leaving them completely exposed, and if 10 years had gone by, coverage would be much more expensive because Scott was now 10 years older.
Most insurance experts recommend keeping your life insurance separate from any coverage offered by work. Consider work-related life insurance icing on your insurance cake.
Trish took her friend’s advice, and purchased a $750,000 term life insurance policy with a 25-year term. This coverage level would give her enough money to pay off their mortgage, put the kids through school and give her a bit of breathing room if the worst were to happen to Scott.
How Quickly Can I Get Life Insurance Coverage
Depending on your health history, age, and a few other personal factors, you can theoretically have an approved life insurance policy in mere minutes. Companies like Bestow and Haven Life can approve you without a medical exam, and qualifying National Family customers often get an answer in less than a minute.
All thats left then is to upload any required documentation and make your first premium payment, and youre covered.
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Is Life Insurance Worth It
If you have dependents, life insurance may be worth the premiums youll pay. It helps give you the peace of mind of knowing that your spouse, children, and anyone else who relies on your income will be taken care of if you die. If you dont have dependents, there still may be circumstances where its worth it, but you should do the calculations to make sure youre getting value for your money.
A friend of mine was complaining recently about his insurance payments. While he pays his life insurance premium every month, theres little chance his family will ever get a life insurance payout.
He was frustrated by the aspect of life insurance that makes it so unappealing to most people. If the policy never gets used, the payments seem like wasted money. If it does get used, the payout will be little consolation in the face of overwhelming grief.
I reminded him that hes not buying a policy so much as hes buying peace of mind. He can rest easy knowing that if something happens to him, hes done all he could to help with financial protection for his family. Thats what all insurance really is a measure of protection to make you feel better.
Alternatives To Life Insurance
If youre getting life insurance purely to cover debts and have no dependents, there are alternatives. Lending institutions have seen the profits of insurance companies and are getting in on the act. companies and banks offer insurance deductibles on your outstanding balances. This often amounts to a few dollars a month and, in the event of your death, the policy will pay that particular debt in full. If you opt for this coverage from a lending institution, then make sure to subtract that debt from any calculations you make for life insurance being doubly insured is a needless cost.
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Wondering If Life Insurance Is Worth It Short Answer: It Is Term Life Insurance Provides An Affordable Way To Help Financially Protect Your Family
If youre asking yourself whether life insurance is worth it, the answer is simple. Yes, life insurance is worth it especially if you have loved ones who rely on you financially.
Life insurance acts as an important financial safety net if you were to pass away suddenly. Term life insurance, in particular, provides coverage at an affordable price during the years your financial dependents need it most.
Learn more about term life insurance, how it works and why it might be an important part of your financial plan.
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Dont Leave Life Insurance Until Its Too Late
Whatever path youre on, always remember that its cheaper to buy life insurance the younger you are.
If youre ready to buy life insurance, we recommend RamseyTrusted provider Zander Insurance. Theyll be able to serve all your life insurance needs. And theyll help you get the best term life policy at the best price!
About the author
Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.
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Insurance Can Be Confusing And Its Hard To Know What You Really Need Or Want But Here Are Fivevery Good Reasons Why You Need Life Insurance
As we grow older, get married, build families andstart businesses, we come to realize more and more that life insurance is a fundamental part of having a soundfinancial plan. Depending on your type of policy, life insurance is fairly cheap, which meanstheres no excuse not to get coverage now. Plus, over the years, youll find comfort inknowing money will be available to protect your loved ones in the event of your passing. Here are afew other reasons why having life insurance is important.
To Protect Your Family and Loved Ones
If your loved ones depend on your financial support for their livelihood, then life insurance is amust, because it replaces your income when you die. This is especially important for parents of youngchildren or adults who would find it difficult to sustain their standard of living if they no longerhad access to the income provide by their partner. You will also need to provide enough money to coverthe costs of hiring someone to cover the day-to-day household tasks, like cleaning, laundry, cooking,childcare and everything else a growing family needs.
To Leave an Inheritance
Even if you dont have any other assets to pass to your heirs, you can create an inheritance bybuying a life insurance policy and naming them as beneficiaries. This is a great way to set your kidsup for a solid financial future and provide for any monetary needs that will arise.
To Pay Off Debts and Other Expenses
To Add More Financial Security
To Bring Peace of Mind