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Ever since there has been cash value or whole life insurance, there has been a bit of a debate. Is this type of insurance a good investment?
The answer depends on what is precisely meant by the question.
If the question is “is life insurance worth it?”, you should know that in 2020 it is estimated there were over $90 billion in life insurance benefits paid. With most average policies ranging from $10,000 to $50,000, that is a lot of families benefiting from life insurance proceeds.
If the question is asked to determine how life insurance compares with other financial investments, you should first understand that life insurance is a product with benefits of its own. Beyond insuring lives, it may have waiver of premium benefits in case of disability or even a loss of limbs benefit. To a degree, the cash value aspect of life insurance is a “bonus”. Life insurance is not designed to compete with stocks or bonds, for example.
One also needs to keep in mind that there is a risk/reward aspect to traditional financial investments. Life insurance already provides value, is low risk, and has a cash value benefit attached to it.
Finally, it is worthwhile to note that many families, especially young ones, may have a difficult time saving money or investing. Life insurance can provide needed protection while building a nest egg. This equity can be tapped into at a later date for emergencies or opportunities. It may even be used as a starter fund for college or a first car. Cash value life insurance can make it a bit easier to set aside some money.
If you have questions about what is called whole life, permanent or cash value insurance, we encourage you to reach out to one of our independent life insurance agents. They can discuss your situation and your goals and go shopping for a life insurance policy that can help you meet those goals. If you already have some life insurance, they can even review those policies with you and help you determine if they have any current cash value. Contact us today.