What age is the right age to think about life insurance? When do you even want to broach the topic of not being invincible?
Recently, my business partner and I went on a quest to figure out if life insurance was even necessary for us. She’s in her late twenties and I’m in my early thirties. The whole topic is rather morbid at first, so you kind of have to think of it in the abstract to really find honest solutions.
Surely, we’re both planning on being alive through the course of most life insurance term plans (20 to 30 years).
Really, the only reason to sign up for a plan now instead of 10 years from now when we both have more responsibilities and bigger families, is because right now we’re both pretty damn healthy.
Our great health will help to lock us into he best rate, despite any complications that may come up over the next several years.
And trust me, insurance companies are looking for any little glitch in your health history as a reason to either give you a huge increase in premium cost, or not insure you at all. They are in the business of making money, after all, and they really don’t want to pay out those death benefits.
So many life insurance term plans just take your premium, and then when you inevitably live beyond the term, you have nothing to show for it.
Enter the Return of Premium plan.
This is really exactly what is says. At the end of your 20 or 30 year term, all of those monthly premiums you’ve been paying, will be returned to you. Awesome, right?
It’s essentially a forced savings account for yourself that’ll help boost your income (tax free) at a time when it’ll likely be fixed, or close to getting there as you approach retirement age.
- You’re not earning any interest on your contributions. Sure, that stings a bit. But in my eyes, that’s the price you’re paying for to get the peace of mind for your policy’s duration, that your partner / family will be protected and taken care of financially should you not outlive your term.
- Inflation. By the time you get your premium payments returned, it’s likely that amount of money won’t buy you nearly as much as it would today. But hey, it’s something!
- You need to be sure hat you’re going to be able to continue paying that premium for the entire duration in order to maximize benefits. If you opt out early, your earnings will be hit with stiff penalties.
All that aside, I still feel like this is the best you’re gonna get if you’re on the hunt for life insurance. It allows you a peace of mind, gets you the best rate when done early, and still gives you that money back when all is said and done.
If only car insurance worked this way, right?!