You might wonder whether you should buy life insurance in your 20s or 30s. If you’re single and childless, it may make little sense for you to pay $100 or more each month for coverage. But life insurance isn’t just a way to protect a family after you die. In fact, it can be an extremely profitable form of investment that you can later use to fund retirement or make a large purchase. If you’re thinking ahead about your future, getting life insurance as a young adult can actually help you gain greater financial security later on.
What Is Life Insurance?
Life insurance is unique in that it does not benefit you directly, at least not in its simplest form. Rather than being designed to cover accidents or injuries, life insurance pays your designated recipients, called beneficiaries, a sum of money after your death. For people who don’t have enough wealth to leave behind an inheritance for their loved ones, a life insurance death benefit can function the same way.
Policies can be temporary or permanent. Temporary policies are typically sold for durations of 10, 15, 20 or 30 years. They are much more affordable, but they have no return on investment if you live longer than the policy’s term. Permanent coverage, on the other hand, is more flexible and generates a cash value. Every month, a portion of your premium goes toward the cash value, which also builds interest. But here’s the caveat in that if you don’t sell your permanent life insurance policy while you’re alive, the cash value is entirely wasted. The cash value simply returns to the provider, and only the specified death benefit is paid out to your beneficiaries. Suppose you want to know more about life insurance and other personal insurance that may help you in the future. Visit feingoldco.com to get started building your financial freedom.
Protection When You Need It, Cash When You Don’t
If you want to get some form of coverage in the event of your unexpected death, you can use a whole policy to achieve that and earn money for later. In order to sell, also called settle, your life insurance policy, you’ll have to hold it for a significant amount of time in order to build up a decent cash value. When you are ready to settle, you can get a lump sum payment that is yours to spend however you please. You can read a guide that walks you through the entire life settlement process before you buy coverage. Once you know how it works, you’ll find it easier to choose the best plan for your budget and future goals.
It’s Never Too Early to Think About Retirement
Even if you’re only in your 20s, the cost of living is high, and it won’t be any lower when you’re 65. Rather than put off retirement planning until you’re much older, get a head start and protect your future today. Learn about the benefits of company sponsored retirement plans if applicable. You can make contributions to a 401k or IRA account, but a life insurance policy can also be effective. In fact, many seniors find that their policies give them money to live much more comfortably than they could on their own savings.
