Have you ever had a dog that is like part of the family?
He (although it could just as easily be she) loves you unconditionally. He’s just happy to be part of your life and you’re glad he’s part of your life. He will stand by you and be there for you whenever you need him. He can’t complain because he’s a dog but you know even if he could, he wouldn’t complain about being inconvenienced. If you need him, he’s there for you, no questions asked.
There are expenses: Food, grooming, buy a dog house, veterinary bills etc. You’re happy to pay. He’s part of the family. You plan to grow old together. He will probably die before you but will leave a legacy. If you die before him, he will miss you and continue to protect your family as best he can.
That’s how he is.
Permanent life insurance is similar.
It’s not flashy. It may not be among the best ways to invest money. What is the best way to invest money? You may not realize large returns from it, but it will always be there if you need it while you’re alive. It will protect your loved ones when you die.
It’s not free. There are no free lunches.
Are all dogs the same?
Are all dogs as faithful as the one described? No, they’re not. The same is true with permanent life insurance. There are different kinds that serve different purposes.
The kind of permanent insurance that most closely resembles the dog described is whole life insurance. You have to feed it but it will never ask for more and it will always be there for you. It will produce cash value in the long run that will be as faithful as the dog. The longer you have the policy, the more the cash value. It doesn’t happen over-night. It’s a long-term commitment. However, when you die, even if it’s the next day, it will give way more than you gave it. It will pay the death benefit in full.
The other kinds of permanent insurance are various forms of universal life. There is some risk involved but there may be a certain amount of guarantee unless it’s variable universal life. Like the dog, if you feed it and keep it alive, it will always be there for you. It’s just that there are more variables to the equation. The equation is not that difficult to understand. If you know how to train a dog, it may be a better option than whole life, maybe not.
It’ll be there for you for the duration of the term but it’s anyone’s guess what happens after that. You need to feed it too and it probably won’t cost as much but nobody gets anything in return until you die.
What’s best? They could all serve you. Choose a dog breed that’s best for you. Choose more than one.
Bob is a life insurance and safe money expert with more than 20 years experience. His company, A Bulletproof Life is based on honesty, respect, and best effort and is the 5 F’s: Food, fitness, finances, fulfillment, fun.