You Can Sometimes Use Your Life Insurance as an Investment Tool (But Should You)?
Louisiana life insurance is designed to give you peace of mind and to protect your loved ones in the event of your death. Without life insurance (or high net worth), your family could find themselves deep in debt upon your death. Especially in the event of an untimely death, life insurance can be a great comfort to your family, helping to pay for necessities even when you are gone.
Term Life Insurance and How It Helps in Louisiana
Term life insurance is life insurance with an “expiration date”. It will pay a specific amount of money (i.e., the death benefit) upon the death of the insured up to the termination date of the policy. Especially if you have a spouse or children who depend upon you financially, having life insurance is a wise idea. Life insurance is a way to be there for them not just now, but also when you are gone. The right life insurance policy will relieve the financial devastation that could otherwise come with the tragedy of an untimely death.
Whole Life Insurance as an Investment Tool
Whole life insurance can be considered an investment tool because it will build up savings over time. Part of your insurance premium in Louisiana goes to buy the insurance, similar to a term life insurance policy, while another part goes into a separate reserve account. This will earn interest, and thus grow in value over the years. And just like you wouldn’t go without car insurance, you don’t want to go without life insurance.
Whole life insurance is “permanent” life insurance because as long as you make the premium payments it will not expire. It will cover you for your whole life. This can be appealing to many consumers, giving them additional peace of mind because they know that they won’t need to replace that life insurance policy with another one when they are older (like you would need to do with term insurance if you still wish to have life insurance once the term expires). Typically, life insurance is less expensive to buy when you are younger (and probably healthier). However, the permanent nature of whole life insurance also factors this into the original price.
Borrowing Against Life Insurance in Louisiana
You can borrow against your whole life insurance policy based on the terms of the policy. Typically, after the first ten years, you can borrow against the cash value of the policy. At the same time, you’re taking a substantial risk.
Just like you would weigh the cost of life insurance or car insurance, you will want to look at the exact details of borrowing against whole life insurance. If you do not pay the loan back, your death benefit will be lower than what you originally planned because the loan along with any interest will be deducted. This will leave your beneficiaries with less financial security. Because of this, borrowing against a life insurance policy is considered to be the last resort for handling a financial emergency.
Is Term Life Insurance Better Than Whole Life Insurance in Louisiana?
There is no one right answer to this question. Nonetheless, term life insurance has less expensive premiums, which can make having a larger death benefit for your loved ones more affordable. You can choose both the length of the policy and the death benefit. For example, if you would like to have a $250,000 policy that will not expire until your children are over 21 years old, you can tailor your policy to those needs.
Life insurance can protect your loved ones in the event of your death. A whole life insurance policy has the advantage of giving you coverage that never expires as long as you make the premium payments. On the other hand, it typically comes with more expensive premiums and a lower death benefit. It gives you the ability to create savings. However, you could also choose to do this by saving or investing a specific dollar amount on a regular basis. People will sometimes refer to this strategy as “buy term and invest the difference.”
Buying Affordable Life Insurance in Louisiana
If you have questions about which life insurance policy is best for you, our USAgencies Insurance agents are ready to help. Visit us at a local office near you, call us at 800-420-3712, or contact us for a free life insurance quote online.