Studies have shown that 80% of us overestimate the cost of insurance (LIMRA, 2015). This is detrimental for two reasons. One, monthly insurance premiums cost less than a coffee for many people. And two, insurance is one of the best investments you can make. Here’s why:
1. Term Insurance is for financial obligations that have a fixed duration, such as a mortgage, car loan, or a child’s post-secondary education. This is like money in the bank, should there be a need to cover these costs. In other words, if you die during the term of the insurance, your financial obligations will be covered.
2. With Permanent Insurance, you are not only covered for life, your policy also includes cash value. In this sense, insurance is a savings plan that you can cash in after a specified period of time — or that can be used to pay for expected costs such as funeral costs, capital gains taxes, probate fees, charitable donations, and legacies. Permanent Insurance safeguards those you care about.
3. Owning life insurance is an investment in your future. Buying it when you’re young and in good health may help you save money in the long run. This is when premiums are at their lowest.
4. “No man is rich enough to buy back his past,” said the writer Oscar Wilde. The longer you delay buying insurance, the more expensive it is likely to be. And if you don’t buy it at all, you may be risking everything you have spent your lifetime to build — your home, savings and the comfort of your family.
5. There are no material riches that compare to peace of mind. If you have peace of mind, you are richer than many millionaires. Knowing that your financial obligations and the costs associated with your death are covered can help give you a profound sense of peace.
Want to know know more about the difference between Term and Permanent Life Insurance? It’s one of the topics we covered in our Insurance 101 Blog Series.
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