Investments Money Matters

Are You Wasting Money On Life Insurance?

wasting-money

It is not a favourite topic for most people. It’s not an icebreaker; you can’t use it as a conversation starter at your next dinner party, introduce the topic at a get together, and you are sure to see people leave your group to find something more ‘fun’ to talk about. It’s natural that we don’t like being faced with the subject of our mortality, forced to look death in the eye.

Many avoid talking about it, when just one conversation could open our eyes to the benefits of life insurance.

A lot of people think they’re wasting their money on life insurance because they’ll end up paying more to service it than the amount they’re covered for.

“That’s a myth,” says Damon McCalla, financial advisor at a prominent insurance company. “Possibly once upon a time, but based on the improvements of insurance products, it is not something you would find happening in this modern age.”

He went on to say that in the past people got less value for their money because of inflation, but modern day insurance policies are inflation-linked.

There are some that believe life insurance is a waste of their hard-earned cash because, without any basis, they assume it’s expensive. Young people are the ones that overestimate the cost the most, meanwhile, interestingly enough, they’re the ones that would benefit from cheaper premiums.

According to McCalla, “Being young, it is highly likely that you are a healthy person; insurance premiums are calculated by age firstly and health secondly. So simply put, the younger you are, (the more likely) the cheaper it is for you to acquire life insurance.”
Life insurance can benefit you as a consistent form of investing. A lot of people might not be aware, but life insurance plans are equity-linked. This give individuals the opportunity to invest consistently and benefit from compounded interest. There is another side to life insurance in which you can opt to pay extra on your premium each month and it goes towards investing in the company, McCalla explained. “This comes in handy as I urge my clients to make their investments goal-oriented. Tracking back to when I was born and my dad used this feature to give me money for my 21st birthday, to kick-start adulthood so to speak,” he laughed.

Life insurance can be a useful tool in estate creation. As you may know, your estate is anything you own or a sum of all your assets. Life insurance creates an immediate estate readily available to be used as collateral for mortgages, car loans, or any other personal loans you may seek to take out. Plus, if you’re using this loan to purchase something of value and not to pay bills, or any other financial burden life may throw at us, then that’s another asset added to your estate.

To continue reading, purchase Vol.8 #6, 2016 Issue.