Do you think life insurance policies are some of the good investments? If life insurance policies are good investments, what are the risk and reward behind investing in life insurance?
There are many things to ask and consider before buying an insurance. One of my reader ask me if life insurance policies are good investments. We want to clarify this today using this article. First, insurance is not another types of investments. Second, there are no guaranteed returns when investing money, and there are no guaranteed returns when paying for your insurance premiums. Some companies may fail to give the benefits to the beneficiaries of the insured. Some companies may even closed or suddenly get bankrupt.
A reader asked:
I am from San Diego California, USA. I am willing to pay for my life insurance policy even though the premiums are very expensive. I know getting insured is very important since I am the bread-winner of the family. Sometimes, my brain keeps on thinking if the money used to pay my life insurance policy was just wasted or wisely spent. I can’t sleep at night searching for the best guide about personal finance. I once remember your advice on buying life insurance was very tough. That’s why I sent you an email message today.
Please help me to my curiosity on buying life insurance. May God always be with you.
Kendrick, 43 CA, USA
Message Received: July 18, 2015 at 11:44 PM.
There are different types of life insurance. There is the term-life, whole-life, universal, etc. The reader don’t specify the type of life insurance he is paying for.
For the meantime, let’s take a short review about their differences:
- Term Life Insurance – it can only give you protection for a stated period.
- Universal Life Insurance – combination of both term insurance with investment that can earned high interest.
- Whole Life – commonly known as lifetime insurance.
Are Life Insurance Policies Good Investments?
Possible Best Answer: Life insurance policies are good investments (but they are not literally type of investment vehicle like paper assets). Why do we mean by it? Just keep on reading this article and you’ll realize what do we really mean.
Read the example situations, one is a hardworking earning 5,000 dollars per month love to buy property like cars and jewelry, the other is hard-working earning 5,000 dollars per month investing in stocks. These two guy both ignore the advantage of having a life insurance policy.
Situation A: The Hard Working Ben
Ben is a 43-year-old guy working in an industrial company manufacturing chemicals like pesticides, paints, etc. His working environment is very health-risky. Ben is earning 5,000 dollars per month and he is the breadwinner of the family.
Suddenly Ben get lung disease, he died. Ben is not insured. he don’t have any investment (paper assets). What do you think would happen to Ben’s family?
Think: Even though Ben has different properties like car and house and lot, these property might going to sell by his family to use for financial recovery.
Logic: If Ben is insured, his family should only use the insurance policy and claim the benefits (amount of money) from the insurance company. Therefore, his family should continue their lives without any further financial struggles or without even selling Ben’s property.
Situation B: Meet John The Investor
John is 43 years old working as a professional graphic design. He earn more 5,000 dollars per month. He is a hard-working man. His working environment is not that risky to health compare to Ben’s work.
John is investing in the stock market every month. He is very happy when he saw the stock price going up. One day, John met an accident. He is totally disable and can no longer work anymore.
Logic: What do you think will John do to survive? Work? No more! He will going to sell his stock shares and use the money to keep on living.
Now, the answer to the question is simple. Life insurance policies are good investments. Whether you are rich or poor. As you have learned from the situation given, you will really need to get insured. Insurance policies is just a simple document, a simple ordinary paper. But it can help your loved ones when you died. If you want to prove your love and care to your family, the best thing to do now is to buy a life insurance policy.
Other Guides You Might Need: What Do I Need to Know Before Buying Life Insurance?
Tips and Warnings:
- Consult to a certified financial planner before you decide to buy life insurance.
- You can simple save a lot of money when paying for premiums by shopping for different insurance companies.
- Do not hesitate to ask to your agent about claiming a benefit, convenient paying of premiums, etc.
- Do investigate for feedback and reviews of life insurance companies in your own country.
- Do not in a hurry. Planning, thinking and proper guidance can help you choose the right types of life insurance.
Do you agree that life insurance policies are good investments? If yes, please add your opinions why you agree. If not, please leave a comment why you think it is not.
Thought of the Day:
“If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance.”
Suze Orman, Author, The Money Book for the Young, Fabulous & Broke