Do I need life insurance if I'm single and have no kids?
Some financial planners view life insurance policies as part of building wealth. Any comments from either those who have opened polices for this reason or from Professionals with comments?
RP4YA - Retirement Planning for Young Americans
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RP4YA - Retirement Planning for Young Americans: Do I need life insurance if I'm single and have no kids?
Life insurance is a tool and it can be used many ways...as a savings tool it stinks for short term savings but for long term, more than twenty years and if built correctly, it will beat out an Ira and save you a ton in taxes later in life. So you shouldn't look at it as life insurance but a financial tool. and who is to say that ten years from now you decide to include someone else in your life and then need to have life insurance and find out you're uninsureable...
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I must disagree with the prior statement in that life insurance can be used as a savings tool or as an investment. Life insurance carries significant penalties/surrender charges for early withdrawals as well as high operating (M&E) costs. The point that JC points out is one that I do agree with and that is if later in life, you do decide to have a family and you have cancer, stroke, etc. you might be uninsurable and by having insurance earlier in life, you may be able to purchase additional protection at a reduced charge or with no underwriting requirements.
Be sure to read the documents that your insurance professional requests you to sign. Also, NEVER sign forms that are blank! This occurs very often and is a major concern. Only sign completed documents and request copies of signed originals for your records.
For additional information, please reference the following:
http://www.finra.org/InvestorInformation/InvestorAlerts/AnnuitiesandInsurance/ShouldYouExchangeYourLifeInsurancePolicy/index.htm
http://naic.org/
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As Mr. Baldwin wrote, Life Insurance is a tool. But importantly life insurance is for people who love someone or owe someone money typically. It is important to have life insurance even if you are young and single. Eventually you may find someone you love or have children, or even find an organization that you wish to leave money to. All this can be done with life insurance along with the savings tool. Also it is important to implement some form of permanent insurance when you are young to lock in the premium. So that when you are 50 years old without life insurance and the premium is the cost of a small home you dont have to worry about it.
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No one ever "needs" life insurance. But if you understand how to utilize it properly, it can be a great tool for generating wealth while you're alive. After all, it is called "life" insurance, not "death" insurance. If one understands how it can be utilized TODAY, not 30+ years from now, it can assist in generating wealth long before you enter your 60's.
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I cannot agree with jc baldwin, In my opinion, there is no need to have a life insurance, if you are single and footloose. There are better options, how you can invest your money until you have family and kids and you really need life insurance to protect your loved ones.
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Universal Life is a great way to "create your own bank". By over funding you beat any investment and can create tax free income for the rest of your life when you reach your 50's. You can also buy cars, houses etc...using the cash that has built up inside of it and pay yourself--not a financial institution the interest!
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