In last weeks edition, we were on the topic of Futures Contracts and recently, this blog has centered around the idea of introducing the reader to many different types of investing. The central idea here was that by doing so, we could begin to dispel the notions of investing being a “professional’s game” that all too often prevent people like you and I from doing wise things with our money. By looking at these topics, we can hopefully get a better idea of how to invest wisely, in any given scenario.
What Is Life Insurance Exactly?
Life insurance is a type of investment that differs wildly from every other type of investment we’ve covered so far. Namely, it’s the one type of investment where you’re guaranteed to never personally see the payoff. However, as every good investor knows, making money is only part of the point of investing. It’s also about preparing for the future and making a better life for our families. It’s in this area that life insurance is seen as a popular investment.
Life insurance is basically a type of income protection for your family that kicks in in the event of your untimely death. After you die, you’re obviously no longer drawing an income. However, the bills in your name, including mortgages aren’t just written off; you’re still accountable for them. If you’re not around, your family will shoulder the blame. Therefore, people buy life insurance policies so that their families will receive an amount of money upon their passing that will help them deal with these financial adversities.
Payout Decreases Over Time
The only real risk to purchasing life insurance is that if you’re fortunate enough to live a long life, the reward payout will decrease over time. Financially speaking, it’s a better investment if you die early, as morbid as that sounds.
Life insurance can be purchased from a variety of dedicated companies, all of which are carefully regulated and supported by the government, making for a very safe and secure investment.
See you next week for part 8 of Investments.
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 – 2009
{ 4 comments… read them below or add one }
As a Newbie, I am always researching online for articles that can help me get further ahead. Thanks a million!
Glad it was of help to you Gerald. All the best for your future investments.
Regards – Sean
Hi Sean,
I never thought of life insurance as an investment but I guess it is. You’re paying a small amount each month so that your loved ones get a payout in the future.
Any suggestions on which life insurance companies you think are the best?
You need to be very savvy when taking out life insurance. Once you get to 55 yrs old I believe you need to have a medical every time you want to increase the policy.
For those of us under that age, we need to look at that. If you have many investment properties there is a way you can structure your life insurance so that when you die, if you leave a pile of mortgages behind, your life insurance can cover the repayment of all of them.
Insurance is a minefield though and reading the small print is vital. Going to an Insurance Broker can be a good idea.