Should You Purchase Life Insurance While You Are Young and Healthy?

This is a great question.  What do you think?  Remember, we retain only 10% of what we read.  If we actively take notes, that increases to 50%.  If we actively engage, this becomes 90%.  Please comment and give feedback.  The reason for this blog is for you.  It is you, the reader that has the most to gain from learning.  So, go ahead, add a comment before reading the rest of this.

According to www.axa-equitable.com, "If you're at high risk for a medical condition that might make it too expensive or impossible for you to get insurance later (e.g., a family history of cancer), consider buying life insurance while you're still young and healthy."

According to www.fbfs.com, "Even if no one depends on you financially, take a moment to think about how your bills would be paid. If you have debt from college or a mortgage, life insurance can ensure you don't pass on that burden. Would it be difficult for your survivors to pay for your funeral and related expenses? It can take years to sort out an estate and liquidate assets. Life insurance benefits pay out immediately and can keep your loved ones from having to cope with your final expenses."

According to www.dailyfinance.com, "I have owned a $500,000 whole life plan for the past 20 years. If I were to cash it today, I would have earned over 4% per year cumulatively, on every dollar I put into it -- not to mention the fact that if I had become disabled, the insurance company would have paid my premiums for me and I'd still have all that cash available to me. Further, my beneficiaries would receive over $500,000 tax free, if I passed away."

My personal take is that you should be working hard to be self insured if you are single since your financial risk is low and the frequency is low (see 4 Quadrants Relating to Insurance).  If you have a lot of debts or dependents, the responsible thing would be to purchase a policy, if there is a financial burden that would be created in the event of an untimely death.  As far as the whole life policy, I would be careful to read between the lines.  If he cashed it out, would he still have access to the $500,000 tax free death benefit?  If he passed away, would his beneficiaries have access to the money that grew at 4% per year?

Thanks for visiting!  Until next time, happy researching!

This post was reposted from http://finlit.biz/life-insurance/should-you-purchase-life-insurance-while-you-are-young-and-healthy/, originally written on February 9th, 2013.