Is Life Insurance a Good Investment?

Before buying life cover, the important thing to remember is that there are three options available to consumers. Is life insurance a good investment?

These are policies with or without investment potential.

Whole Life Insurance

Whole Life insurance is a comprehensive policy offering a guaranteed payout.

Policyholders pay premiums from the day they invest until they die or select to sell or surrender the policy.

InvestmentIt can be regarded as an investment policy because it has a cash value based on premium payments over a certain length of time.

The other attraction about Whole Life is that the insurance holder never needs to worry about death benefit payouts.

Irrespective of what health issues may lead to death, beneficiaries will receive the payout benefits of the policy.

While premiums for this type of policy are usually more expensive. Policyholders can borrow money against the policy after it builds up a cash value.

Universal Life Insurance

A Universal Life policy is the Rolls Royce version of a Whole Life policy because it has a built-in investment option.

Additional cash amounts are credited to the policy each time the holder makes a payment over and above the minimum monthly premium.

Monthly interest is then earned on these cash amounts, offering rapid investment growth.

Term policies

Term policies are to cover policyholders for a specified period, usually between 10 to 20 years.

This type of insurance is particularly popular among the younger age group for two reasons:

Monthly premiums are affordable

Policyholders have coverage for any outstanding debts, such as the purchase of vehicles, based on the face value of the policy.

It has no investment value and no payout value once they reach the term of the policy.

It will, however, safeguard beneficiaries against outstanding debt claims up to the value of the policy if the holder dies before they reach the term of the policy.

Versatile options – Is Life Insurance a Good Investment?

There are some life insurance policies that are more versatile than merely covering outstanding debts after death.

For example, apart from outstanding debts such as payments on property, vehicles or other purchases, there are policies available that offer permanent disability cover.

Although most people will adopt a “that will never happen to me” attitude. It is always wise to consult a broker or financial advisor about the options of life cover available in today’s market.

Obtain quotations and all relevant details about all life policies to make an informed decision about what best suits individual family needs and lifestyles.

How much life insurance do you need?

It’s an important question for two reasons. Only buy a policy for as much money as needed. Secondly, never buy additional extras that will cost more on premium payments unless deemed as necessary. Rather spend that extra cash on upgrading the value of the death payout benefits.


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All info was correct at time of publishing