Why Life Insurance Is Not An Investment
A life insurance policy is basically a mutual agreement between your life insurance carrier and you
. You agree to pay a certain amount of premiums for a stipulated number of years. In return, the life insurance company agrees to pay your beneficiary a certain amount of benefits if you should die during the tenure of the contract. This is the dynamics of term life insurance which is the most basic and most affordable life insurance you can opt for.
Whole or permanent life insurance includes an investment factor. It attracts customers because premiums paid accrue interest after a period of time. This interest is then added to the death benefit. However, because of the investment factor, whole life policies are more expensive than term life policies. There is debate on whether the investment factor in a whole life policy is really worth it. If you were to invest the difference between paying for term life and paying for whole life, the interest you accrue on that amount through a long-term investment plan would be greater than what a whole life insurance policy would pay you. Using a
life insurance policy as an investment is something you should consider carefully as there might be other options available that could make your money work harder for you.
Coming back to the basics, death benefits are what life insurance is all about. If you have someone who depends on your income, you need life insurance. Life insurance is not complicated. It is a means of making up for the economic loss a family would experience if an earning member died. This means, after your death, your family would have enough money to afford a comfortable lifestyle. Ideally, your death benefits should be able to cover any debts, the mortgage and other priority expenses such as college education for your children or a daughters wedding. When you deviate from the simple purpose of term life insurance, purchasing a life insurance policy tends to become complicated and more expensive.
There are several types of term life insurance policies you could consider:Return of Premium If you survive the term period, premiums you have paid are returned to you without interest.Renewable This gives you the option of renewing your policy for another term without have to prove insurability.Decreasing Premiums decrease towards the end of the term.Convertible This gives you the option to convert a term life policy to whole life.Level term This type of term life insurance keeps your premiums fixed throughout the term period.If your main objective is to protect your family in the event of your untimely death, then pure life insurance is what you need. A basic term life insurance policy is affordable and will meet your requirements. You can find the best term life insurance simply by using the services of reputable online
life insurance quote providers. They offer independent and objective recommendations that can save you up to 70 percent on a life insurance policy. Fill in the questionnaire and youll receive the best estimates from reputed life insurance companies.
by: Denise Mancini
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