My mom took out a life insurance policy for me when I was a kid. She recently transferred ownership to me. I’m 29 now, and after speaking with someone from the life insurance company, I still don’t fully understand if keeping this policy is a smart financial move or if it’s worth it.
I do have life insurance. Most people with kids or planning to have kids get life insurance because it’s essential if anyone depends on your income. Life insurance for children was more common in the past due to higher child mortality rates and as a savings tool. Policies like that often don’t make as much financial sense today, but they were seen as an investment back then.
@Jensen
If you have kids, term life insurance is usually the way to go. Whole life insurance is rarely the best option for most people.
Vin said:
@Jensen
If you have kids, term life insurance is usually the way to go. Whole life insurance is rarely the best option for most people.
This is absolutely true. Term is the better choice for most people. Whole life insurance is only useful in rare situations, like dealing with estate taxes for very wealthy individuals.
Vin said:
@Jensen
If you have kids, term life insurance is usually the way to go. Whole life insurance is rarely the best option for most people.
I agree with this. Whole life can make sense if you have significant cash or specific needs, but it’s rare.
@Clove
Whole life insurance is almost never worth it. Get term insurance and invest the difference.
Vin said:
@Jensen
If you have kids, term life insurance is usually the way to go. Whole life insurance is rarely the best option for most people.
There are niche cases where life insurance makes sense, like buying it before genetic testing if there’s a family history of certain diseases. It preserves the option to buy more coverage later, even if preexisting conditions develop.
Vin said:
@Jensen
If you have kids, term life insurance is usually the way to go. Whole life insurance is rarely the best option for most people.
Whole life insurance with a long-term care rider can be useful for some people, but it depends on the situation.
Life insurance replaces income for dependents if you pass away. If no one depends on your income, you may not need it. For example, if you’re single and debt-free, it’s not as critical. If you’re married or planning to have children, it can be a part of your financial planning.
@Baer
I’m married, and we’re considering having kids in the next couple of years. We’re also planning to buy a house soon. Is life insurance more like inheritance planning, or is it different?
Nori said:
@Baer
I’m married, and we’re considering having kids in the next couple of years. We’re also planning to buy a house soon. Is life insurance more like inheritance planning, or is it different?
It’s not really for inheritance planning. It’s about replacing income that someone depends on, like your spouse or future kids. Other financial tools are better for inheritance planning.
@Baer
Thank you for explaining that. I think I understand better now.
Nori said:
@Baer
Thank you for explaining that. I think I understand better now.
Think of it like this: If you passed away unexpectedly, would your family be able to cover expenses like housing and education without struggling financially? That’s where life insurance helps. It’s especially useful for families with kids or a mortgage.
Nori said:
@Baer
I’m married, and we’re considering having kids in the next couple of years. We’re also planning to buy a house soon. Is life insurance more like inheritance planning, or is it different?
At the very least, it’s worth having enough coverage to handle funeral costs, pay off debts, and replace a portion of your income to help your spouse adjust financially.
Nori said:
@Baer
I’m married, and we’re considering having kids in the next couple of years. We’re also planning to buy a house soon. Is life insurance more like inheritance planning, or is it different?
Do you know if it’s term or whole life insurance? Whole life policies tend to be expensive, and you might get better value by cashing it out and looking into term policies.
@Payne
I was gifted a whole life policy that’s fully paid off. If yours is similar, you might not need to pay any premiums. If it’s still requiring payments, it could get costly over time.
@Baer
If you’re single, a small term policy could be useful for covering debts and funeral costs, so your family isn’t burdened.
You could cash it out. These policies often don’t make financial sense, even if they were taken out with good intentions.
Mason said:
You could cash it out. These policies often don’t make financial sense, even if they were taken out with good intentions.
That sounds like my mom. She probably meant well but didn’t fully understand how these policies work.
@Nori
It’s not her fault. Salespeople often use fear tactics to sell these policies, convincing people they’re the only way to protect their family.