When Insurance Makes Sense Financially
There are all types of insurance that the modern world requires. However, there are some insurance programs that are touted as investments, which may or may not be beneficial to you in particular. Like any investment, you have to know if it is going to help you meet your financial goals in the future. Life insurance, in particular, is one of these products that are often referred to as an investment, but which only really make sense for a particular demographic of people. Single people with no dependents don’t require life insurance as it is primarily meant to benefit survivors, not the person who has passed away. However, when you are the sole breadwinner of a growing family, having some form of life insurance can be a good way to safeguard the financial health of your family when you die unexpectedly. And, as a side benefit, the policy holder can take out loans against their life insurance policy in times of need. The interest rates charged on the loan vary, and should be understood before using this avenue rather than a more conventional form of financing.
Some Things to Consider When Borrowing
Just because this is your life insurance policy does not mean that you don’t have to pay back the amount you borrowed. If you don’t pay it back, it will affect the amount of death benefits your survivors can access. Interest charged on a loan from a policy may or may not be competitive to other forms of financing. And, you may end up compounding the interest you owe annually, if you fail to make the appropriate paybacks. This can quickly eat up the value of the policy. If your policy lapses or you decide to discontinue it, you will be responsible for the taxes due on any loans you took out from the policy as taxable income, if it falls under the criteria of gains as decided by the Federal government. These factors will differ from one policy to another, so you need to understand the terms of your agreement before you try to borrow off a life insurance policy. In any event, it’s best to use this financial vehicle for what it was originally intended, life insurance, and not as a loan vehicle.
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The problem is also is in the generation of people. Young people, for example, use the insurance less, cuz’ they think that it is better to have some party than to give the money somewhere. But when they face the problem they will realize it.
What about rental insurance? I’ve been thinking lately about the fact that I don’t have rental insurance. I’m 25, and in quite a bit of debt, but should I have this?
Another type of insurance that has a mini-investment feature is a Health Savings Account (HSA). Essentially, it is a catastrophic health insurance policy with a “side fund” that enables you to accumulate money (at a very low interest rate) to pay for medical expenses in a tax-favored manor.
Here in Ohio, HSA’s are quite popular for persons looking for a health insurance quote. Often, they cost less than conventional health insurance and allow the consumer to have much more control over their health insurance program.
Big thing to watch the interest. It almost never competitive with other forms of lending. Think about a reverse mortgage if you are older and have paid off your home.
insurances are really good. but, some people would refuse to have this. instead of paying their insurance fees they would rather spend the money they have to buy their personal needs.
What about rental insurance? I’ve been thinking lately about the fact that I don’t have rental insurance. I’m 25, and in quite a bit of debt, but should I have this?
I don’t like to have an insurance. I think it’s useless! Nothing is gonna happen!
UPDATE: HSA rates staying about the same while traditional health plans are on the rise.
Again, HSAs are NOT for everybody. But there are some nice incentives that make it enticing!
Insurance is a necessity, and still people would choose not to have it.
Insurance is important now for us, why ? because we do not know what will happen in the future.
Like any investment, you have to know if it is going to help you meet your financial goals in the future.
Now-a-days Life insurance has become a new shape. It has been merged with mutual funds as well. So along with life coverage, we will get some big return after few years. So people are rushing towards it these days.
Insurance.. I’m going to think about it. Thanks for the advice.
Life insurance is only important when you have kids or when your family’s assets are relatively small in comparison to expenses. If a family of 4 has $500,000 in liquid or near-liquid assets and expenses are in the $30,000 a year range a life insurance policy probably isn’t really necessary. But if that same family has $10,000 in liquid assets the policy may be a necessity!
Having insurance is a must,. for most assets
Where you get it from is where you really need to put attention, putting effort and time into researching for insurance can really save you money. Also, having an insurance broker as friend helps too
I’ve had to take a loan out against my insurance policy due to one of life’s emergencies. It was nice to have. Nicer to pay off.
It is a very interesting and very detailed post! I have realized that there are a number of things mentioned in the post, which I never think about!
I agree with Andrew Link.Young people never take it as a serious matter.
Very good insurance article. Everyone needs insurance in all of their life. Thanks for sharing this.
I’d agree with the fact that insurance really helps people in the times of need. There are so many types of insurance for our help. Under circumstances that we get involved in fatal accidents, insurance could really be of great help to us. You may check the different types of insurance that are there in this site http://www.ampminsure.org/all.html
yeah thats a good point, with the credit crunch people are even less likely to evaluate what insurances they need even though this is the most important time to make sure your insurances are all in order.
The problem is also is in the generation of people…
Insurance is an absolute must, especially now due to financial crisis.
Who can really afford to pay doctors fees abroad or funeral costs it something goes wrong?
That’s why travel insurance is a must
yeah i think i must have insurance too
We actually use our permanent policies as banking solutions. It requires a mutual company so you get credited back the interest, but it really has some incredible advantages.
Clarification, we overfund these policies so that the base premium is low and the rest goes into cash value. It creates a self funding system in 5 years and a tax free environment for money to be borrowed and payed back.
Yes insurance is the good way, so every one have to get insurance of their vehicle, life and home…
insurances can help you. And make sure you don’t default with your premium, else you’ll lose it all together.
Thanks for sharing this wonderful article with some great stuff.There are a large number of insurance companies that sell insurance policies online. In addition, the fierce competition among these companies has led to some of the lowest prices for life insurance policies in years.
I personnaly prefer to have the lowest amount of insurance as possible. People these days are getting over assured and they loose money in the long run.
I hate thinking about insurance, but it seems to be something I’m having to consider more and more nowadays, along with how I’m going to finance it. It does indeed seem to be something that becomes more important as your responsibilities in life increase. Thanks for the post.
I don’t want to get an insurance but I think its important nowadays, so I’m considering it now but not to the extent that I’ll use it for my personal wants.
Insurance is good, but not for lowest amount
I need to get health insurance, but I don’t have kids so I doubt I’ll ever have life insurance.
I agree with you! That’s nice article
I also have thinking about insurance. I think I just don’t like thinking about my mortality. But I don’t like to be over-insured. My brother has a job in insurance, so I usually have him figure out what I need and how much I should be paying. Good article, though.
Joe’s comment was valuable as was the post’s main highlight. It seems that this post was made a long time ago. The current economic situation is so much different that it was back then. I’m sure the credit crisis has given a lesson or two to the overspending population
I’ve been looking for car insurance and came across
http://www.primericasecure.com
Does anybody know anything about them?
I only get insurance that is required by law or absolutely necessary.
Thinking about insurance just makes you think about the things that could go wrong. You don’ want to think about them, but you should.
Insurance is indeed an investment - but if you deal with the right provider. Your money is going to be stored a real long time. You surely want to work with the ones you trust.
Ahh, you’re stirring in murky waters here. You know some people would call an insurance investment an oxymoran.
Good post.
Female Drivers will always Get cheaper premiums than men, because Women are better drivers generally.
I think life insurance is more important if you have a spouse and a family as they will need it when you are gone, if you are young and healthy and have no reponsibilites, life insurance just seems like an added cost?
great insurance information on this blog.
I’m one of those people who always put off buying insurance unless its required by law. I’m guilty of thinking “it’ll never happen to me” and thankfully so far I’ve been lucky.
There are definitely times though when buying insurance is the sensible option, if only to put your mind at rest.
ric
my friend is an insurance agent, he is asking me to get a health insurance, i am only 24 now, is it worthwhile now to have a health insurance
Getting an insurance is something that is not common in my country. This for me is disadvantageous since we have to pay with whatever we’ve earned for that particular moment when needed. I think it is far better to get insured and have that relief that when emergency occurs, all will be well and we won’t have to get a loan.
Does more insurance have anything to do with credit reports? I really think this so many times. I found things related to this when I was reading something the other day. But I am not clear about it. This article is good and gives us the idea of how insurance depends on so many factors.
I always vote for insurance - it cam be prices, but shop around and only get what you need. Don’t pay for insurance coverage that you will never use, no use and a wast. You never know what is going to happen and you will be glade that you have the insurance when the time comes.
Why do people like to discuss the importance of insurance when they felt something bad? They are not aware on this when they still in prosperity. Well, I have learned very much in this post. THanks
take the best insurance - than you have no problems. (but also not enough money for other things
im not into insurance, if the insurance company is making a profit then the odds are not in your favour! you should only take out insurance if your are risk averse in economist language
I can’t stand thinking about insurance- especially car insurance. Half the time, it seems like a complete waste of money. In my opinion, if you are paying for insurance each month, then in the event that you get into an accident or something happens to your car, why should you then have to turn around and pay a deductible?
You know- I can’t help but wonder….if insurance was an OPTION versus something that is mandated, would people still get it? I tend to lean towards the side of those who think that it’s an incredible waste of money….just my opinion…
i think insurance is a great way for your investments as we all know any risk that can be quantified can potentially be insured.
Insurance is inevitable when it comes to dealing with risk. That forms the fundamental part of the insurance. All I can say is “Insure and feel secure”
nice articles..
You only need insurance for things you can’t afford to replace.z