As an insurance broker we’re supposed to tell you all the reasons why you should buy life insurance. For example, it’ll give your family peace of mind if you die unexpectedly, it’ll cover your funeral costs, or it’ll pay for college or credit card debts. We will also tell you how you can use some life insurance policies while you are still alive. For example you can use your permanent life insurance policy to provide cash flow in retirement, to pay for unexpected medical bills or to fund your kid’s college tuition. While all of these are good -and true- reasons to buy life insurance, there is always a downside to everything. We will give you six reasons why life insurance may not be so advantageous:

Cost. The first and most obvious disadvantage of purchasing life insurance is that it costs money. While you can get lower rates when you are young and healthy, the longer you wait, the more expensive life insurance becomes. If you buy life insurance in your 20s (and don’t smoke and are healthy) then a term policy could cost as little as $30 per month. But if you are a little bit older and have some health issues, that number can quickly go up. If you are looking to buy a permanent policy though, those premiums can be much more expensive.

Benefits others. Another disadvantage of life insurance is that it is typically purchased for the benefit of others. Most people buy life insurance so that their family is protected when they die. So you spend your life putting money into a policy, and you never get any monetary benefit from it. However, you do have the peace of mind that your family won’t have to worry about finances when you are gone. So there’s a silver lining.

Time. There are life insurance policies that build cash value, that can be used while you are alive. However, it can take many years to build cash value and those policies tend to be more expensive than basic term policies.

Unnecessary. Another issue with life insurance, is that it may not really be necessary. If you have no dependents or debts, and you have money saved up for your final expenses and burial costs, then life insurance isn’t necessarily a must. If you have a partner or a child who rely on your income though, life insurance becomes important.

Invasive. Applying for life insurance can be a quick and painless process, but it can also be long and tedious. Depending on your age and your health, some applications may take weeks or months to complete, and you will likely need a medical exam. Life insurance carriers need to know everything there is to know about you, so they will look into your medical records, finances, and driving history. They need to know if they are making a good investment, so they need to gather as much information about you as possible. Not everyone is excited about being poked and prodded, so this may deter some people from getting a policy.

Confusing. If you don’t have the right broker, life insurance can be really confusing. There are a ton of options out there and you need to make sure you are getting the best advice and choosing a policy that fits your needs and your budget. If you don’t know what you are doing, you can be tricked into buying something you don’t really need. You need a trusted adviser who will sit down and discuss your finances, your options, and what will be most beneficial to you and your family.

Overall, life insurance has a lot of advantages: cheap rates when you are young, peace of mind knowing your family will be financially secure, and the option of dipping in to your policy’s cash value if and when you need it. The application process can be relatively painless if you apply when you are young and healthy. Having life insurance is part of a good financial plan.

One big downside of life insurance of course is cost. You don’t want to keep putting money into a policy that will never be used. But at the same time, you’d much rather have a policy and not need it, than need it and not have it. While a permanent policy can be used while you are alive, it’s important to remember that these types of policies can take some time to build cash value, and are more expensive than term policies.

Can you put a price on peace of mind? Maybe not. But you can sleep better at night knowing your family is financially protected.

Contact us for a free life insurance quote and consultation:

hello@cardonacompany.com