Life insurance is an essential part of a well thought out financial plan.
As high-risk life insurance brokers, we work with people who’ve been declined for life insurance frequently.
Many of our clients desperately want life insurance, but cannot qualify for one reason or another.
After seeing how difficult it can be to get life insurance with pre-existing conditions, it is hard to comprehend why people would think life insurance is a waste.
Is life insurance a waste of money? No, life insurance is not a waste of money since it provides valuable financial protection to our loved ones who rely on us financially, and peace of mind to the insured.
Understanding life insurance and how it works is imperative to realize that life insurance is never a waste of money.
It seems that the best life insurance companies are aggressively competing with each other every year for your business.
That competition results in increasingly lower term life insurance rates.
Use our free rate comparison tool to view how affordable term life insurance from highly-rated life insurance companies is.
Our article will dive deep into why life insurance is needed, not a waste.
You can skip ahead to any section if you like:
Why Term Life Insurance is Not a Waste of Money
If you have anyone depending on you financially, life insurance is not a waste of money.
Life insurance provides a ton of value to both the primary insured and the beneficiaries of the death benefit.
The most common use of term life insurance is for income replacement and family protection.
The certainty of a life insurance death benefit can replace the lost income of a family’s breadwinner so that the surviving spouse and children don’t have to struggle financially.
For the insured, you get the peace of mind knowing that your loved ones are protected financially if you’re not alive to provide for them.
Another example is mortgage protection life insurance, which is a common motivation to buy life insurance.
Most people will live to see their mortgages paid in full today.
However, if a primary income earner dies during the loan, it can be catastrophic.
Mortgage protection life insurance gives families the security of knowing that they will remain in their family home if there is premature death.
Another common reason to buy life insurance is to provide funds for higher education to your children.
Saving enough money to give your children a college education is difficult.
Life insurance guarantees that your children can afford to go to college even if you are not alive to see it.
Why You Should Consider Permanent Life Insurance
Term life insurance is an affordable way to provide temporary death benefit protection for your loved ones, but what if your need isn’t temporary?
Cash-value life insurance sometimes gets a bad rap in the media sometimes, but it is certainly not a waste of money in
One of the best reasons to own permanent life insurance is for legacy planning.
Funerals can be expensive.
The average funeral costs approximately $8,000, which can be a large unexpected bill for your heirs if they are not prepared.
Burial insurance is a type of permanent life insurance that is designed to pay your burial costs and final expenses when you die.
Final expense whole life insurance is a simplified issue policy that is designed to cover less than $40,000 of death benefit.
Other types of permanent life insurance will pay larger death benefits if more money is needed when you die.
For example, if you need money when you die to pay estate taxes or even out an illiquid estate among several heirs, universal life insurance is a great option.
Universal life insurance is usually a more affordable option than whole life insurance because there are fewer guarantees, usually.
Like whole life insurance, universal life insurance grows cash value in a tax-deferred account.
However, if the policy is not funded adequately, your policy may lapse, so it is important to review your universal life insurance periodically.
When Does Life Insurance Not Make Sense
There are times when life insurance doesn’t make sense, however.
If you have saved up enough money to achieve financial independence, you may not need life insurance.
If you were to die, your heirs would be able to use your estate to pay your final expenses and supplement their lifestyle expenses.
This philosophy has been popularized by a financial strategy known as “buy term and invest the difference.”
The way buy term and invest the difference works is you buy a term life insurance policy instead of a permanent death benefit and invest the difference in cost.
At the end of your term policy, you would have hopefully saved enough money to no longer need life insurance death benefits.
While this sounds great in theory, very few people achieve this milestone in real life.
In fact, there are studies that suggest that most people buy term and spend the difference.
Our agency receives calls regularly from people who have term life insurance is expiring and still have life insurance needs.
The cost of purchasing life insurance in your 50s and 60s is significantly higher than when you’re young and in excellent health.
As a result, many people won’t repurchase coverage, not because they feel life insurance is a waste, but because they cannot afford it.
Final Thoughts on if Life Insurance is a Waste of Money
In our opinion, as high-risk life insurance brokers, life insurance is not a waste of money.
Life insurance provides valuable death benefit protection that gives the people we care about the most financial security.
When you buy life insurance, you are buying peace of mind knowing that if you die prematurely that your family will be set financially.
Term life insurance will take care of the life insurance needs of many people.
However, permanent life insurance is useful in specific situations with a lifetime death benefit need.
While some people are fortunate enough to reach a point where they no longer need life insurance, you should plan conservatively.
You can always cancel your policy if you no longer need it, but qualifying for a life insurance policy later in life can be difficult.
With life insurance rates at historic lows, cost should not be a barrier to buying life insurance.
Use our free rate comparison tool to compare the term life insurance rates of over 50 top life insurance companies.
Thank you for reading our article on is life insurance a waste.
Please contact us if you have additional questions.