The main purpose of life insurance is to create an estate to take care of your heirs if you should die. Therefore, we believe the time when your need for life insurance is at its greatest is when you are young with young children.
Fortunately, when you are young, term insurance generally offers the best bang for your buck. Healthy adults should be able to get a $3 million policy very inexpensively. You may not be able to afford the equivalent death benefit in a permanent life insurance policy. Generally as you grow older, the children are on their own and your savings have grown. As your need for life insurance diminishes, you may not need the same level of asset protection as you did when you were young.
Many permanent life insurance policies build a cash value that you may be able to borrow against. We believe that most investors would be better off buying a term policy. We recommend taking the difference you’d pay in the premium for term life versus permanent life insurance and investing it in the stock market.
The return on a cash value policy could be less than what an investor may receive holding a 30-year bond. We recommend investors put their long-term money into the stock market. By investing the difference in the market, you have a variety of investment options to better suit your risk tolerances and savings goals. You may also be able to invest in tax-advantaged accounts such as Roth IRAs.
If you have any questions, contact the Experts at Henssler Financial: experts@henssler.com or 770-429-9166.
Disclosures
The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
