Image by: By State Farm
By Richard K. Noots
I bet you’ve been offered life insurance at least once or twice in your life by some random guy you didn’t know, but supposedly had your best interests in mind. Of course, you didn’t believe him. You’re too smart for scams. Now, of course, I’m not saying all life insurance policies are scams. However, all things that involve money usually have a few jerks in the midst who are only in it for their own greed. It can make it really hard to trust companies that do have your best interest in mind.
You guessed it, that’s why we are here today. Just a quick pro and con list of things you should know, and what to be wary about. We aren’t here to make the decision for you, instead, we just want you to be informed. This is a decision that you definitely need to think about before you just start investing. Make sure to talk to your family before you make final decisions as well. After all, no one likes an angry spouse …
#1) So, just what are the pros?
Well, for starters, if you die your family doesn’t necessarily have to worry if they’ve no means of supporting themselves. That, and some other smaller benefits that come depending on what type of insurance you get. Whole-life insurance lets you build up cash and borrow it relatively tax-free, while term-life insurance works a bit differently. Regardless, there are some questions you need to ask yourself if you’re considering getting life insurance.
What risk are you insuring yourself against? How long do those risks last? If you want to make sure your child has money for college, a risk like expires if he happens to complete his education and you’re still around. Not to mention, how much would a risk like that cost if it were to happen? Life insurance policies only get more expensive as you get older, so outlining reasons why you need one when you can afford it is a good idea.
In the end, the pros are nothing more than just security. If you can afford life insurance and lead a good life with you and your family, there isn’t much reason not to secure something like this. Of course, if you don’t have a family, I suppose this whole thing becomes a sort of moot point, don’t you agree?
#2) The big, bad cons.
The biggest con is actually … The cons that can occur. As you get older, you’ll notice more and more companies trying to take advantage of you. So, when you’re looking at companies make sure to check out who they are online. Check their reviews and make sure they’re licensed through your state. It’s very easy for someone to make off with a check of money after a few sweet words and promises.
Whole-life insurance tends to be the one that gets more scams done in its name. Often, this is because insurance agents only receive commission for pay, and this premium offers the most amount for both parties. If you have a strong 401K and/or IRA, you don’t really need such coverage, or the ability to access that money. This means the safer bet is in Term-life insurance, as its more direct and easier to manage.
Remember, the sole purpose of life insurance is to replace your income in the case of your death. So you need a premium that covers a set amount of years that equates roughly to your salary.
#3) The Final Point
If your nest egg is pretty set up, as in you have a steady income, no worry about bills or mortgages, have a 401K and an IRA, you could stand to start thinking about life insurance. If you’re not that set up, there isn’t too much reason to get an insurance premium until you’re financially viable. This guide helps illustrate what to look for in all types of life insurance, and deserves a thorough reading if this is something you’re considering.
Other than that, if you make less than 30,000 a year, you probably don’t need to concern yourself with life insurance just yet. Your head is in the right place. Instead, focus on improving your nest. Once that’s done, you can work on securing your nest once you’re gone.
Do you have life insurance? If so, what kind? Do you know anyone who has been scammed by policies?