Is Life Insurance A Scam?
Whole life policies can be expensive, and when we write that check every month to our insurer, sometimes the wallet pain of today speaks a little louder than the big promises of the future.
While those promises are significant, they do come at a cost.
Life Insurance–and particularly whole life insurance–can be expensive.
One of those costs is money–the actual premium payments you make.
Another cost is commitment. As long as you are able to continue paying your premiums and keep your plan running, you and your beneficiaries are almost guaranteed to benefit from holding your policy.
You pay your premiums, but if that’s all you do, then you don’t really see a penny of it back.
And, oddly enough, that’s almost the whole point of life insurance.
As morbid as it might sound, the full realization of your life insurance purchase won’t happen until after you pass away and money is provided for your beneficiaries.
This can lead some people to wonder if life insurance is a ripoff, or a scam.
(Spoiler alert: it’s not a ripoff OR a scam)
Tradeoff, Not A Ripoff
One of the draws to whole life insurance is the cash value that accrues over time. Being able to watch the growth happen in your cash value can be a rewarding reassurance that your investment is worthwhile.
However, if you’re expecting to see exponential growth month to month, prepare to be disappointed. While the value of stocks or bitcoin can soar, (and plummet!) the money in your cash value fund increases safely, steadily, and consistently.
This safe place to grow and save money is worth every penny. Actually, it’s worth more than every penny you put into it – as the interest you accrue and the dividends you receive make for a compelling & competitive asset to use.
This fund isn’t just for your beneficiaries, either. Many people use the cash value from their whole life insurance policies to supplement their retirement income or as an emergency reserve fund.
These kinds of benefits (to you over time as you need them, and not just to your beneficiaries when you are gone) are significant. Coupled with the death benefit that does go to your beneficiaries, the value of these kinds of insurance policies is self-evident.
With those benefits in mind, it’s easy to see that life insurance isn’t a ripoff–it’s a trade-off.
Should you need or decide to cancel your policy, or let it lapse, not only is your death benefit at risk, but charges and fees may take a cut out of your cash value as well.
Depending on the timing, what you get out of the policy at that point may be far less than what you put into it.
As long as you are willing to commit to your policy, the trade-off (costs vs. benefits) will be worth your while. The only way your policy can become a “ripoff” is if you let it.
Life insurance, like most everything, does take some effort and sacrifice on your part in order to get the most out of it.