I’m 25, studying to become an engineer, and my dad recently got me involved in looking at life insurance. A few years ago, he got inspired by a talk at church about investing and life insurance. He’s now a licensed agent himself and thinks it’s super important for me to start early.
Recently, we had a Zoom meeting with another agent (very charismatic, seemed convincing), and I filled out an application. My dad even said I could make money by becoming an agent too. But now I feel uneasy. I’ve been reading up on Transamerica, and a lot of what I found makes it seem like a pyramid scheme. The agent is pressuring me to finalize everything, but I don’t feel 100% confident about this.
Is this something I should avoid? Has anyone been in a similar situation? I appreciate any advice!
@Zuri
Thanks. My dad and the agent keep saying it’s smarter to start now, but I don’t have kids yet and plan to wait until my 30s. Wouldn’t starting early mean I’d save up more in the long run?
Winslow said: @Zuri
Thanks. My dad and the agent keep saying it’s smarter to start now, but I don’t have kids yet and plan to wait until my 30s. Wouldn’t starting early mean I’d save up more in the long run?
That’s a common tactic insurance salespeople use. They want you to think waiting will cost a fortune, but the difference is small. For example, I got a 10-year term policy at 46 for $1.5M, and it was under $800/year.
Focus on maxing out a Roth and contributing to your 401k first. You’ll be way ahead financially, and you can get life insurance when you actually need it.
Winslow said: @Zuri
Thanks. My dad and the agent keep saying it’s smarter to start now, but I don’t have kids yet and plan to wait until my 30s. Wouldn’t starting early mean I’d save up more in the long run?
No, don’t fall for that pitch. Get term life insurance only when you have dependents or get married. For now, focus on paying off debt and investing on your own. Avoid using life insurance for investing.
@Adair
I get your point, but buying term life a little earlier can help lock in better rates while you’re young and healthy. Waiting too long might mean higher premiums or health issues that disqualify you.
@Luca
True, but if you’re older and single, you probably don’t need it at all. Serious health issues could also make having kids unlikely. Wait until you’re at least engaged before buying, assuming kids are in the plan.
Winslow said: @Zuri
Thanks. My dad and the agent keep saying it’s smarter to start now, but I don’t have kids yet and plan to wait until my 30s. Wouldn’t starting early mean I’d save up more in the long run?
Starting young means locking in lower rates, and you won’t have to worry about future health issues disqualifying you. Permanent insurance can be a solid option for building cash value.
@Riley
Permanent life insurance isn’t a great option for most people. The cash value grows slower than a Roth IRA, and over decades, the difference can be huge. Investing in the market gives much better returns.
@Riley
Permanent insurance works in very specific situations, like handling estate taxes or covering illiquid assets. For most people, term life and investing are better choices.
Contributing to your 401k (especially Roth 401k if available).
Building emergency savings.
Investing through a brokerage account.
You can consider term life insurance later if you want to lock in insurability. Permanent insurance only makes sense in niche cases, like covering estate taxes.
Permanent insurance is rarely used for creating tax-free inheritances. It’s usually for covering estate taxes. If you’re looking to pass on wealth, consider gifting or setting up irrevocable trusts instead.
Is your dad working with Transamerica? IULs (Indexed Universal Life) can be great tools, but only if designed well for your specific needs. If you don’t feel right about it, trust your gut. There are other ways to secure your future.