Smart Life Insurance, at Twenty.

There is a plethora of good reasons to avoid life insurance, regardless of your age. As the saying goes, the money that you pay for life insurance every month can be put to better use, especially if you are in financial straits, and every penny you part with can make a difference in your current situation.

You might need bread tomorrow. Or milk. Or lunch. Or you might be the one in charge of buying the beer at the frat party, a bad thing if this falls on the very day the insurance payment is due. What would you tell your friends if you didn’t show up with the booze? That you had to pay for insurance?

But is this good reason a good reason? By all means, if a life insurance policy can put you in a higher financial strait at a time when you’re making little income can be a good reason not to shell out your small wealth.

Despite this fact, life insurance can be a savior when you need it, and a smart investment, especially when you’re young. With the proper life insurance, and the right company, nothing term, you are protected for life. A life insurance is an asset. The money that you pay in every month for your policy accrues a cash value.

This cash value occurs in a number of ways. A popular way is by adding the difference between the premium you pay each month and your final expenses. At American Income, the method is simplified by adding a fixed interest rate to each premium in your favor, which is higher than what a typical bank would give you for your savings.

While it is not proper to look at life insurance as some sort of bank account, it is good to know that you can use the cash value as a savings that you can take out at the proper time in the form of a loan and use it for whatever you see fit, even take a vacation to las Bahamas with your frat or sorority mates.

The advantage of starting in your twenties.

The younger you are, the cheaper life insurance will be. If you start in your twenties, the chances of hitting the low-price jackpot increase, and if you find a fixed premium rate for your policy, you’re on to a good start. Banks will often take risks in favor of a life policy, especially if it has a substantial cash value.

If you are entrepreneurial, and have an idea for a business, or you want to invest in real estate, you can use the cash value in your life policy to get a loan or line of credit somewhat equal to the amount in the cash or face value of the policy.

What if you default on your loan? You can save yourself by getting the money out of the life policy to pay the debt. While it will discount the face value of the policy should you die the next day, the good thing is that you can pay it back in installments if you don’t.

Your policy will be safe as long as you keep paying your premiums. The insurance company will simply deduct the amount you took from your final expenses, meaning your beneficiaries will get less money than what you signed up for originally after your passing.