English Español

Is Savings-Based Insurance Right for You?

senior couple sitting in chairs and chatting

Savings-based insurance is policy that is fully funded with one up-front payment. The death benefit is guaranteed, and the benefit grows tax-deferred. The policy’s versatility allows it to be used for end-of-life care, unexpected medical expenses, and other options depending on how it is written.

Although savings-based insurance has many benefits, there are several considerations to make before taking out this type of policy. Here are three questions to ask yourself when deciding whether or not to go with savings-based insurance.

Can I afford the premium?

The premium for savings-based insurance is paid up front, so you must be able to invest a significant sum of money into this policy. Savings-based insurance policies require an investment of anywhere from $5,000 to $15,000.

If you’re interested in purchasing a savings-based insurance policy but are concerned about pulling that amount from savings, there are other options to consider. This policy can be used in a variety of ways, and it may make financial sense to convert your CD or money market account into savings-based insurance.

Am I comfortable with the risk profile?

Although savings-based insurance policies are known to grow quickly and provide a great return on investment, there are some exceptions. If you choose riskier investment options, it’s possible that the cash value will decrease. However, there are several options to consider with this type of policy. Discuss your options with one of our financial advisors to decide what is best for your personal retirement portfolio.

What is my goal for this policy?

Do you want to be prepared for potential medical emergencies? Provide tax-free death benefits for your children or grandchildren? Pay for a grandchild’s college?  Leave a legacy gift to your favorite charity? All of these options are viable for you with savings-based insurance. To ensure your policy is written correctly, you will need to have an idea of how you plan to use the policy. Keep in mind that once you have invested in the premium, you can get your money back, but you cannot add to the premium. Consider your savings-based insurance goals and talk with one of our financial advisors to help determine the best way to write your policy.

Savings-based insurance is an excellent option for many investment portfolios, and it can provide benefits to both you and your beneficiaries. Contact one of our Peak American Financial representatives today to learn more about how we can put savings-based insurance to work for you.

Recent Posts

Archives

Categories