Life insurance is necessary. Sure, you can make the argument that a single person with no children probably doesn’t need it, but I disagree.
No, they don’t have anyone to support, but someone will have to pay for the funeral and burial arrangements. Get a little bit as a courtesy to the person responsible for your remains.
In this article, I’m going to share my personal feelings on life insurance, as well as my current circumstances with my own policy/estate planning.
Life Insurance
As I said in the beginning, life insurance is a necessity. However, the purpose of the policy and the type of policy will differ from person to person.
This makes sense, right? Everyone is different, with different circumstances and points-of-view, so their insurance policy should be tailored to meet their needs.
With that in mind, my personal opinion with regard to life insurance is that it should only be an insurance product. There are several different types of life insurance (i.e. whole life, universal life, variable life, etc.).
Each serves a purpose and has unique advantages and disadvantages.
You might think that one or several of those products are the bee’s knees, and I’m not saying any of those are good or bad. As I stated, life insurance should just be about insurance. My desired life insurance product is term insurance.
It’s bare-bones coverage. You select the term you want to be covered for and the death benefit. That’s it.
Insurance and Investing
Term insurance is much less expensive than the other products out there. The intention behind this is to compare term insurance to your typical whole life product.
Specifically, compare the monthly premium of the two. Whatever the difference is, contribute that to an investment or retirement account.
Be advised: This is not a recommendation for best practice, just my personal opinion.
This strategy will not suit everyone. Whole life can be a great way to diversify your holdings if you’re a wealthy individual. Retirement accounts have contribution limits. A whole life policy could be another “bucket” of retirement savings.
My Current Setup
When I found out I was going to be a dad, I got life insurance. Specifically, I got a 30-year term policy with a $300,000 death benefit. That still exists and I’m still paying for it.
I would like to get some more so I can set my son up if anything were to ever happen, but first, I need to make some changes.
Since I got divorced in February, I need to do some creative estate planning because my son is only 2-years-old. I can’t directly leave him the money because he’s a minor.
I need to see an estate attorney, once things return to normal, to set up a trust. I’m doing it this way because I can set up a guardian for my son and someone to take control of the money if I were to pass away.
There are several other nuances to estate planning that I have yet to experience, so I’ll be sure to give an update once everything is all said and done.
My Last Reflection:
How My Finances Changed with Covid
Related Reading:
Ultimate Estate Planning Guide
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