Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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family investing in life insurance

Despite what many life insurance agents tell you, life insurance is not an investment. It is a protection that you put into place that will benefit those you leave behind upon your death. To get instant online insurance quotes just enter your zip code above now!

Even with life insurance policies that offer a cash value option, you are only able to access a portion of the premiums that you pay.

A true investment gives you much easier access to your money and allows it to grow so that you can use it during your lifetime. The only real purpose for carrying life insurance is to provide replacement of income lost due to death.

No Return on Investment

If you want to place your money somewhere as an investment, you would make a much better choice with a mutual fund or other type of standard investment, whereby your money actually has a chance to grow. Life insurance is extremely expensive, has high fees involved and you do not actually get your money back.

It goes to someone else following your death. If by some chance you decide to terminate a whole life insurance policy, the amount you receive back is pitiful compared to what you pay in. Even if you have paid on that policy for a long time, the return following cancellation is very low.

Typically the goal of investing money is to make your money grow. You want it to at least keep up with inflation, and ideally to grow at an even better rate. However, the return on investment with life insurance is definitely not at that rate. If you are counting on life insurance as a retirement investment, you would be much better off if you funnel your money into a true investment.

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Choosing the Amount and Type of Life Insurance to Carry

When you are in the market for life insurance, in order to protect those you leave behind, there are a variety of things to think about. Take the time to determine how much your family would actually need if you were to die tomorrow. Would that amount be different if you died in 20 years or 40 years from now? You likely answered yes to that question.

That means the amount of life insurance you need is, for most people, dynamic. Therefore, you should consider carrying whole life coverage for the amount you would like to leave behind if you live until old age. Choose a less expensive term life policy to cover the extra amount of life insurance you need for the interim.

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Buying Life Insurance for Protection

In order to make a wise decision for your life insurance needs, take the time to shop around and compare and contrast the policies that different insurers offer. For the most part, life insurance policies are rather standard. However, each company has its own set of underwriting guidelines. Therefore you may find a lot of variation in price as you shop around. Don’t let price be the determining factor for your life insurance policy. Check out the company itself.

Because life insurance is typically something that you will hold for a long time before it pays out, if it ever does, you will want the insurer to still be in business and still be financially stable enough to pay out benefits when necessary. For this reason it is more important to check out life insurance companies than other types of insurance companies before you buy. Contact one of the independent insurance ratings companies, such as A.M. Best, Standard & Poor’s or Moody’s in order to get the rating of any company you are considering buying a policy from. An A or better is a good indicator that the company is financially stable and has a good outlook for the future and for their continued commitment to meeting their financial obligations.

You should also take the time to look into a company’s customer service track record before buying life insurance. Companies typically give spectacular service when you are purchasing and paying for your policy. However, they may be less than spectacular when it comes time to pay out. Therefore, be sure you look into how they treat beneficiaries. Your state department of insurance may be able to provide you with such information. Doing an online  searchfor life insurance rates will also get you real life reviews of the company that are very revealing.

Start shopping around today by using a free online quote tool to get a variety of price quotes from life insurance providers in your area. Click now on the insurance quote tool to get started now.