Do You Need Life Insurance For Your Family?

If so many agents will try to talk you into purchasing a policy that builds a savings element.  Is that the best type of life policy to buy?  Before doing so please carefully review this important information because permanent life insurance may not be in your best interest to purchase.

We would be glad to discuss whether or not this type of life insurance is appropriate for your circumstances. Call 513-662-7000 to speak with one of our life insurance experts. 

What is Permanent Life Insurance?

This is the type of life insurance policy that builds cash value. That cash value in later years can be borrowed through policy loans or the policy can be canceled and the accumulated cash value would be available to the owner of the insurance policy. 

Permanent life insurance is the most predominantly sold type of life insurance in the United States.  Permanent life insurance goes by a number of different names.  Permanent life insurance can be called:  Whole Life, Variable Life, Universal Life, Adjustable Life, or Variable Universal Life Insurance.

Primary Advantage of Permanent Life Insurance

The premium payments on a permanent life insurance policy such as whole life insurance would be guaranteed to remain the same as long as you own the life insurance policy. 

That is not true for permanent policies known as Universal life, or adjustable life insurance policies. We will discuss these particular policies in a future article. 

Primary Disadvantage of Permanent Life Insurance

It is very expensive compared to term insurance and the rate of return is very poor as an investment.  Let’s assume that a 45 year old man in excellent health was in need of $500,000 of life insurance coverage.  To purchase this amount of whole life insurance with one company would cost $613.83 per month!

In addition the rate of return is very poor for cash value policies.

Example:

Investing $613.83 each month over a period of 20 years would amount to $147,320. What would the guaranteed cash value be at the end of 20 years with this particular company?   Only $148,310!

In contrast if you were only able to achieve a 1% return on your money in a savings account, at the end of 20 years your investment would be worth: $163,813.90 compared to $148,310 from a whole life insurance policy.

There are some forms of permanent life insurance policies that may pay a larger return because it’s linked to the stock market, but the rate of return will be far less than what you could achieve on your own by simply investing in mutual funds or in your 401(k).

You Are Making a Major Mistake If You Buy Life Insurance As a Savings Vehicle! 

Permanent life insurance policies are useful in several scenarios such as estate tax planning, business life insurance in Cincinnati, or final expense needs.  But that’s pretty much it.  If you are purchasing permanent life insurance as a savings vehicle plus insurance you are making a financial mistake.

If You Need Life Insurance in Cincinnati Contact Pathway Insurance. 

We offer professional advice on life insurance.  Do you need life insurance for your family, or do you need specialized expertise on complex business life insurance in Cincinnati? With more than 22 years of serving thousands of clients we are the life-insurance experts of Cincinnati.

Call 513-662-7000 or e-mail Jack@pathwayinsurance.net