Having life insurance is a necessity for most, but there are those who are having second thoughts when it comes to signing up for one. Although it may seem beneficial, it is also important to think about the pros and cons before actually putting your money on it. Give it a thorough thought if it is something that you or your family can benefit from. One of the examples is investing in whole life insurance. Though it may sound promising, there are things to consider as this specific investment might be wasteful for some.
In an article published by Business Insider, it was clearly explained as to what the insurance’s benefits are or if it is something that’s worth the investment at all. It was explained that whole life insurance lasts a lifetime, as based on the title itself. It also comes with a cash value. What makes it enticing among investors is that these two benefits are not available on any other insurance.
Although the insurance’s cash value is something that most can look forward to, it should not be the main reason why you should consider investing. It is just an additional benefit, but not the primary goal. The same as with having a savings account, it holds the capacity to grow with interest over time. It will never deplete in value unless the policyholder would withdraw the amount.
As for those who’d wish to invest in insurance without really having a concrete reason, financial experts suggest investing in a different plan. It was mentioned that life insurance is perfect for those who’d want to have minimal investments. Those who are still trying to work with a budget should skip on considering whole life insurance as it is one of the most expensive policies and a bit difficult to maintain, too. It is best for those who opt for long-term protection, especially for business owners.
As mentioned, whole life insurance offers lifetime protection for the policyholder. Though it is expensive, it does not have an expiration like a term life insurance. When it comes to the cost, it is 10 to 15 times more expensive compared to other offers. If you do have sufficient cash flow to sustain the payment, then go for it. It provides lifetime protection, money that can be passed on to your heirs, and a guaranteed savings account.
Who are the ideal prospects?
Whole life insurance holds a specific benefit. It comes with a death benefit that comes with a cash value component. Although it’s highly expensive, one of the biggest pros is the fact that it allows investors to pass on what they earned into whoever their heir is. Term life policies may be a lot affordable, but the policyholder will no longer be able to provide any cash value one the insured person passes.
John McLean, who works as a certified financial planner, mentioned that term life insurance often benefits those who’d opt to have their family business or a family member covered at the time of sudden death. But for those who’d opt for a more permanent benefit, whole life insurance works best.
Who SHOULD NOT get whole life insurance?
As mentioned earlier, not everybody can benefit from whole life insurance. It was mentioned that those who do not have dependent may opt for other policies to consider. It is also not ideal for those with budget constraints, and those who still cannot support themselves.
Always keep in mind that putting your investments on something requires second thoughts. Best if you think things through before going for it.
The details of this article are based on Business Insider’s write up.