Maybe a more important question should do you want to protect your family’s financial future? While investing money in your IRA or 401K, do you thnk is life insurance a good investment? it’s likely that you will consider plenty of alternatives, but understanding life insurance and more importantly the difference between term life insurance quotes vs whole life insurance quotes might be the most important alternative you look into. You also have options if you are in need of a no exam life insurance policy.
Let me preface this article with the fact that I am not giving financial advice, as I am not securities licensed. I am however explaining how life insurance can be used to protect your future. While Wall Street gives you and me potential to make money and invest for our future, there is plenty of risks. A perfect example is a 529 plan for children’s college fund. What happens if you die young and can’t contribute to the 529 plan? The original plan called for 15-18 yrs of input, if you die young that plan doesn’t complete itself without your contributions. What if the market tanks the few years prior to your child’s 18th bday? How will your child go to college? Life insurance protects your assets and liabilities plus offers long term protection that a retirement account and or tax-free college funding account can’t offer.
There are basically 2 types of life insurance: term life and whole life. People value the two for different reasons, and they offer diverse benefits. Here’s a little more about their differences.
Term Life Insurance
Term Life Insurance quotes are the most affordable for a simple reason, term insurance has a set period of time to protect you. Term periods range from one year to thirty with everything in between (10-30 years). If you reach your demise premature while a term life insurance policy is in force your beneficiaries will receive the death benefit. There is no cash value and nothing permanent about this type of policy. Usually, consumers buy term life for the purpose of protecting a liability. As an example, a new mortgage holder might want life insurance to pay off the mortgage for a premature death of the payer of the mortgage. Or a young parent wants to ensure that their newborn has money if the parent dies young before the child reaches adulthood. Term Life Insurance quotes are usually very reasonable and there for a good investment. There is one huge advantage inside most term policies called a term conversion rider. You can learn more about term life conversions here. But to summarize this rider offers conversion rights to the insured to a permanent life insurance product without proof of health.
Permanent Life Insurance
Permanent Life insurance is either whole life or universal life and usually, the policy is for the entire life of the insured. Some people buy permanent insurance for final expense planning. Others use permanent coverage for accumulating cash value tax-free, and or to pay estate taxes on the wealthy. is life insurance a good investment? The cost of permanent coverage is more expensive than term ultimately because the policy will more than likely pay a death benefit. The other advantage is permanent coverage grows tax-free at a good rate on the cash value side of the policy. Over the past twenty or thirty years insurance companies we work with have illustrated an average of 5%. This money grows tax-free and can be withdrawn or borrowed from later in life. Permanent life insurance is more expensive than term so most don’t consider it a good investment, but for the educated savvy investor life insurance is a smart option and one that is never overlooked.
What should you choose?
Cost usually plays the biggest factor for consumers deciding on coverage. If you have assets and money sitting in the bank not earning interest then a permanent plan might be a smart option. A permanent policy would guarantee a tax-free benefit for your heirs and might build long-term cash value tax-free. Term life insurance is obviously more affordable and therefore an easier pill to swallow. Speaking with a licensed independent broker to offer free advice is probably in your cards as an independent broker can shop and compare rates and companies.
Is life insurance a good investment? The alternative is more costly, so my advice is to call me today for a free personalized quote or fill out the request on the left side form.