Is life insurance a good way to build savings?These are the words of Suze Oman

Image Source: Getty Images

In that regard, it’s probably not the best option.

Key Point

  • Whole life insurance policies accumulate cash value.
  • It can count as savings, but there are better ways to build cash reserves.
  • Having savings separate from life insurance is a smart financial move.

purpose of having Life insurance Protecting the people most important to you from financial hardship in the event of your death. Let’s say you are the sole breadwinner in a family consisting of you, your spouse, and your children. What would your family do for money if you died suddenly in an accident?

It’s a scary question to think about, but that’s why life insurance exists. And you might be surprised at how affordable it is to put it in the right place. term insurance.

Term insurance covers only a specific period of time. But that period can be long. It is common to take out a term life insurance policy that covers your loved one for 30 years.

One thing to know about term life insurance is that these policies do not accumulate cash value. If you take out term life insurance at age 30, choose a 30-year term, live to age 60, and find that you are still alive, you get nothing from that policy (but you still alive, so ).

on the other hand, whole life insurance policy conduct Accumulate cash value. And that’s money that technically can count as savings.

But does it make sense to choose whole life insurance as an element of your savings? Ask financial expert Suze Orman, and the answer is a resounding “no.”

There’s a better way to build your savings

It’s easy to see why whole life insurance is attractive to some people. If you buy whole life insurance, you will eventually get some financial benefit from it, but with term life insurance, you may not get paid out of your insurance.

However, life insurance has a big problem. It can be prohibitively expensive. In fact, it is not uncommon for owners of whole life policies to let coverage expire because they cannot afford it.

That’s why term life insurance really is your better bet. And if you’re worried about missing out on that savings factor, it shouldn’t be a concern, Orman says.

actually, blog postsays Orman.

take your savings into your own hands

Life insurance and savings really have two separate purposes and should be treated as such. Therefore, keeping your term life insurance premiums low may be your best bet. savings account Balance. That way you don’t waste money on whole life insurance premiums.

The danger with whole life insurance is that if you stop paying premiums, your coverage may expire and you may lose your savings. When No insurance. So rather than take that risk, consider life insurance that actually fits in your budget.

Recommendations for the best life insurance companies

Life insurance is a must if you have someone to rely on. We’ve combed through your options to create a list of best-in-class life insurance coverage. This guide can help you find the right life insurance company and the right type of insurance to meet your needs. Read today’s free review.

Leave a Comment