What You Should Consider When Thinking About Using Life Insurance as an Investment

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There has been plenty of information regarding purchasing life insurance as an investment. The question remains; would making such a decision be wise? Well, there are numerous forms of life insurance. Before thinking of buying a life insurance as a form of investment, you should consider the type of life insurance in question. Many of those who try to offer advice pitch one, two, or more aspects as regards investing using life insurance. However, at the end of the day; it comes to you as an individual. What is beneficial for you? Does what is included in a particular life insurance policy suit your needs? This is why carefully analyzing the insurance before taking it up.


Instead of running online to look into the personal opinion of the so called financial gurus who have different opinions when it comes to using life insurance as an investment, why not consider these 3 important aspects:

  1. How much of life insurance do you really need?

This aspect is important as with every purchase, you just need to buy the amount you need. The main thing about life insurance is making sure that your family will have what they need when you are not there or in a position to provide. If buying a particular policy requires you to pay much but you can only afford less, then it is time to rethink your steps. This would mean buying much less than you need at a high cost. Another angle in this aspect is getting a costly insurance that actually offers much more than you need. This means the insurance includes other aspects that will not be of benefit to you and your family. Such policies mean that you will spend on a policy that will give things that you and your family will not really need in the future. You do not need to give more to the insurer for what you will not need in future. This will amount to just you growing the insurance company for what they need but not what you need.

  1. For how long do you need the insurance?

Life insurances are usually expensive because they are meant to cover you through your entire life period. After retirement, many usually do not need this cover since they usually have no dependants and in many cases, they have the social security benefits to live on. Assessing your case however may help you determine the length of time you need life insurance. Some still find themselves in need of this in their retirement years. This includes individuals who have insufficient assets to cover their last costs, those who have dependants that do not have income when they die, and those with a taxable estate and can use the insurance to pay off the estate tax.


  1. Are the tax benefits able to outweigh the cost?

On purchase of a permanent life insurance, a section of the premium is kept in a cash value account which is able to grow. The growth is usually reliant on the interest rates, dividends, and earnings. Look into the manner the life insurance you are getting works since the policies from different providers work in different manners. Looking into the tax benefits is essential. For some, you can be able to borrow the cash value in place to pay for education or to use during retirement without having to pay any taxes for it. You should be wary though since some of these sub-account investments involve risks. Weigh the risk and assess if it will impact you in negative way and by how much before taking this up. A balanced decision will see you sail through rough economic times in a smooth manner.

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