Hi, I’m writing an essay discussing whether young people should consider life insurance. I understand that it depends on whether the insured person has dependants or debts to pay. Are there are methods of saving money that are more cost effective? Thanks
Should young people consider life insurance?
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There is no guarantee on how long we live,and there is a real chance that disaster could strike before the amount needed to protect your loved ones could be accumulated. With a policy, if it's in force one day, and you were (God forbid) to pass away in an accident on the second, the policy would pay out in full. What investment pays off that well? Secondly, that benefit paid is tax free, and generally probate free. Many estate battles take years, and on average eat away about 40% of the value of the estate that would have been left. The third, and in this economy that favors the wealthy and stresses the majority of Americans, a whole life policy provides a source of money in an emergency. As the policy increases in age, it also increases in its cash value. That value becomes available for the policy owner to withdraw if a need arises, with virtually no questions asked. With interest rates and credit ratings what they are for the majority, having a strings free cash source can be a life saver.
I hope that gives you some food for thought for your essay. I almost forgot to mention that the younger you are when you purchase your policy, typically the cheaper it is. Most companies lock that price in for you, so it is set for your whole lifetime. As a result, a policy purchased in one's 20's typically will be cheaper, and much easier to get than a policy purchased when one is in their 50's or 60's. If you'd like more help, please feel free to contact me. This is a lazy week for most of us, and I'll have some free time :)
Thanks for asking, and good luck on your paper!
Investing in stocks is one good way to potentially make a large return on one's money; however it also carries the risk of losing the investment. Life insurance is a low cost way to provide large amounts of money to survivors. A combination of these is one way to hopefully save up some money while also protecting dependents or paying off debts. You can even combine both these strategies in one policy, called Variable or Indexed Universal Life. There are many good companies that offer policies like that, and each has their own pluses and minuses.