23/06/2024
Sharing some insights on What Life Insurance Isn’t.
Let’s clear up some common misconceptions about life insurance:
❌ Not an Investment Tool: While some policies have investment bits, life insurance is about protection, not making it big. It’s there to give your loved ones financial security when you hit the bucket. Life insurance is primarily about protection. Life insurance with investment (such as VULs) should not be the only investment in your portfolio either. But it's definitely better than none at all. If you are better at investing your money, consider getting Term Insurance. If you have minimal to zero investments and without life insurance, VULs could be for you.
❌ Not a Savings Account: Don’t confuse life insurance with a piggy bank. Sure, some policies build cash value, but they're not meant for short-term savings or high returns. Think of it as a safety net, not a savings plan.
❌ Not a Quick Fix for Money Woes: Life insurance isn’t the go-to for immediate cash needs. It’s a long-term play to support your family after you’re gone. For short-term needs, look at other options like loans, credit card facilities or emergency funds.
❌ Not Health Insurance: Life insurance and health insurance are two different beasts. Life insurance pays out when you pass away. Health insurance covers medical expenses while you’re alive. Health insurance is also not an HMO. HMOs are great for immediate health care needs like having a doctor's appointment, getting laboratory work done, or in case of health emergencies. All three are essential but serve different purposes. If you are in a financial position to get health insurance – GOW! I think it goes without saying that this is just as important.
❌ Not Morbid, Just Practical: Having life insurance isn’t about being morbid—it’s honestly just being practical, responsible even. As a mom with a 2-year-old, planning for the unexpected gives me less anxiety knowing that my kid can go to college even when I’m gone. Also knowing that my husband will not fall in financial despair is such a relief.
Are Financial Advisors comfortable with the thought of dying? They shouldn't be! If anything, they're only helping you plan for the financial security of your loved ones. If your Financial Advisor made you feel anything less than this, consider looking for a different advisor.
I hope this helped you understand the true purpose of life insurance. It’s a part of a legit and solid financial plan, ensuring your family is taken care of when they need it most.
Till the next one.
Keep your money growing and your future glowing!
