Why is life insurance important?
If death is true, then the hope of life cannot be denied. The hope of life is the pivot of the world. We buy houses, cars, furniture, and a lot of entertainment, because we believe in life, in life assurance. But when it comes to planning for life, for legacy, for whole life, we say, nothing is permanent, even life. It is permanent, as we remember great warriors, their life, as we remember our ancestors, their contributions in our life, similarly, we can leave a legacy today, and stay in the family forever. Life is precious, the best natural gift basket, our job is to protect it, and a whole life insurance policy is the best protection.
We use all means, clothes, helmets, shoes, to protect the parts of our body. Every time, we use maximum protection like wearing a life jacket while learning to swim, parachutes while jumping from the sky, wearing a helmet while learning to swim. Therefore, it is very important to protect the driver of your body parts as well.
Is Life Insurance Expensive?
No, it is not from a realistic point of view, nothing is more precious than life. Life is a unique gift, there is no substitute for it, we should not ignore it searching for affordable life insurance.
In terms of money, you can get the best life insurance policy at a young age. A universal life insurance policy can be customized to pay as you go or can be paid up in 20 years. Some life insurance policies have cash value accumulation options, the great option for liquid assets available for emergencies.
We have a whole life insurance policy with 20 years payment plan and cash value.
There are other policies available in the market, such as term insurance policies and group life insurance policies, which are quite affordable.
Let’s look at affordable life insurance with an example, how big coverage you can get at an early age.
We have a 20-year payment and whole life insurance policy.
As you can see, coverage decreases with age.
If you want 2.5 million coverage at the age of 60, what will be the premium? I don’t think it will be less than 10,000 a month. This is what makes it expensive because we start planning at the age of 60.
The guaranteed coverage is another benefit of buying permanent insurance at a younger age. Sometimes, insurance companies decline the coverage or ask for more premiums because of activities such as car racing, paragliding, etc. which is cheaper at an early age.
Is Life Insurance a Good Investment?
If we look at it from the point of view of life, nothing is more important than this investment. On the other hand, if we look at the value of money, it declines over time, and not only in insurance, the value of money declines everywhere.
As per the rate of inflation in Canada, according to the Bank of Canada official rate of inflation calculator, the value of money has declined in 20 years.
It is true that what we could have bought 10 years ago with $100 is hard to buy with $150. I am also in favor of this truth, But let us dig deeper into it with an example.
There are three persons, started saving $200 a month.
- The first person, let us name it “CASH”, believes in keeping cash at home, not interested in investment or insurance. So, “CASH” brought a piggy bank and started putting $200/month in it.
- The second person, let us name it “BANK”, believes in banking, not interested in insurance. So, “BANK” opened a savings account.
- Third, let’s name it “INSURANCE” interested in a whole life insurance policy.
Now, After 20 Years.
- CASH has $48,000 cash in hand, which is equivalent to $24,000 due to inflation.
- BANK has $50,977 (200x 12x 20x 0.6) or $63,000 (estimated, if invested in RESP). The actual value of money is $25,500 due to inflation. (It is worth mentioning here that the RESP will be used after 20 years)
- INSURANCE has $63,000 cash and $450,000 life insurance. Although the value of money has declined to $31,500, life insurance is still in place.
After 40 Years.
- CASH`s value of money has become zero.
- BANK money has depreciated because the bank’s interest rate is lower than the rate of inflation.
- INSURANCE still has the value of money, and at the same time, life insurance has increased to $0.6M.
After 60 Years.
- CASH and BANK are no more in the game. The INSURANCE has life insurance of $1 million.
So the whole life insurance policy is a great investment, in terms of the value of money and life security.
Some people say that real estate investment is the best, especially in Canada. I am 100% in favor of it, but, how much can I buy in real estate for $200 a month?
Are Life Insurance Investments Safe?
Yes, it is fairly safe, since every insurance company is regulated by the government. Your investments are safe and assured. If any insurance company goes bankrupt, your principle is safe as per Assuris.
Life insurance can rewrite your family relationship.
Yes, it is true, if I have $1 Million coverage in hand, I will enjoy better family relations. Although money is not everything, it is something that can play a vital role in a comfortable life. Life insurance is a legacy, keep it rolling from generation to generation, for better family ties and financial security. For example, if I buy a policy for a two-year-old child today, the child will have a policy for my grandchild when he/she turns 30, and this chain continues.
We spend our whole lives building houses, cars, and luxurious properties. But, What are our plans for the financial future? Let us start today.