Over 500,000 U.S. citizens have lost their lives in the coronavirus pandemic, according to the Centres for Disease Control. So, naturally, mortality is on the minds of many who are stressed about providing for their loved ones in case of death. Having a structured financial plan in place is important, and life insurance is an important part of that. Here, we assess the pros and cons of investing in a life insurance policy.

The Pros

Peace of Mind

Thinking about death isn’t a comfortable thought, but you need to bear in mind that it is essential to ensure your family is financially secure after you’re gone. The payout will be handed over to the person you choose as your beneficiary.

Tax Benefits

Unlike the proceeds of a retirement plan, death benefits pass to beneficiaries free of tax. Also, if you have a whole life insurance policy, which offers a lifetime’s worth of coverage, you can continue paying your premiums and reap tax advantages. With a whole life insurance policy, a part of your premium will be gathered in a savings-style account that grows to be tax-deferred.

Savings at Your Disposal

If you choose a permanent or whole life insurance policy, you can get the cash value that has accumulated either by withdrawing it or borrowing. The tax consequences and amount available will vary according to your policy.

The Cons

An Added Expense

Paying for something you may not need in the near future always feels like a burden. Plus, if you want to buy a new policy when you are older, you’ll find that the cost of coverage has increased.

Insurance Cost

In addition to the coverage amount you select and your age, there are several other criteria that dictate the price of your life insurance premiums. The kind of coverage you pick will influence how much you pay. For instance, term life insurance, which offers coverage for a fixed number of years, is generally relatively inexpensive compared to whole life insurance, which covers you until you die. The insurance cost is also determined by factors such as your lifestyle, medical history, job, and health-related habits.

Learning Curve

Besides the ongoing expense, another con of buying life insurance is deciding which type of coverage you want and what is more affordable. If you’re a beginner with regards to looking at life insurance policies, the range of options can feel overwhelming.