Last updated: November 24th, 2022
Reviewed by
Rebecca Thrift
Licensed Insurance Agent
Term life insurance can be worth the cost if you have dependents who would be financially unstable if you were to die. The knowledge that a mortgage and college expenses would be covered can be worth more than just peace of mind to you now, it can also ease the future of your heirs.
In addition, if you’re in need of tax deferrals, permanent life insurance can be part of a smart tax strategy. This is especially true if you’ve already invested the maximum allowed into your 401(k) and individual retirement accounts (IRAs). By investing in life insurance, you can defer the taxes due on that income until you retire and are in a lower tax bracket.
Table of Contents
Whole life insurance can be a good investment for someone who needs to diversify their portfolio. It’s also a solid choice for those who want to avoid risky investments, such as the stock market. While the returns are typically lower than those in more traditional retirement instruments, for many people, the knowledge that their investment is safe and reliable is worth the trade-off.
People with a high net worth may max out their tax-deferred IRAs and 401(k) retirement accounts fairly quickly. Those looking for retirement investments with further tax deferral benefits often turn to whole life insurance policies, which can be surrendered for cash later if needed. Very high net-worth individuals also often turn to life insurance as a way to help their heirs pay estate taxes.
Life insurance can be a good investment for those with a lifelong dependent, such as a sibling or child with a physical disability. A whole life insurance policy can be part of a trust that provides for this dependent after your death.
Having a life insurance policy provides more than peace of mind. A person who wants to make sure that their loved ones are cared for in the event of their untimely death may opt for term life insurance to pay off the mortgage and cover future college tuition. Others may opt for a permanent life insurance policy with a cash value to add to their investment portfolio. Among the positive reasons to purchase life insurance are the following:
While life insurance isn’t for everyone, it can provide real peace of mind for some while moving them closer to their financial goals. Among the people who should look into life insurance are:
Someone who has no dependents and no debts is unlikely to need life insurance. If you have the savings or other resources to cover any end-of-life expenses or funeral costs, life insurance may not be needed. People who have ample resources to provide for their dependents also may not need life insurance. In addition, those who are living on a tight budget probably should direct their resources toward basic expenses, such as food and shelter.
At Insurancy, we can help you find the right life insurance with a short questionnaire. We’ll match you to your top options and help you figure out the costs involved. We make it easy, shortening your waiting time and keeping everything simple.
Brian is the founder and CEO of Insurist and carries Life, Health, and Property & Casualty licenses in all 50 U.S. states. Since 2013, Brian has been a member of Million Dollar Round Table, a designation for the top 1% of financial advisors worldwide. Brian has been featured in Yahoo! Finance, Money.com, Entrepreneur.com, Life Happens, Forbes, MSN, and Good Financial Cents. Brian’s goal is to show customers the best products, the quickest answers to their questions, and provide expert advice.
I've worked for Safeco and Liberty Mutual as a sales agent and claims adjuster for the last five years. My claims experience is primarily auto insurance, but I am licensed to sell auto and property insurance (homeowners, condo, renters, long-term renter, etc) currently.
