When planning for retirement, or for personal finances in general, life insurance is a useful tool but not as a means of saving, according to Walter Updegrave of Money Magazine. Instead, life insurance policies should be used to provide for spouses and dependent children in the event of a tragedy.
Updegrave recommends term life insurance, which carries an annual premium that must be paid to the insurance company, in exchange for their guarantee that a death benefit will be paid to a policyholder’s surviving loved ones.
Cash-value insurance policies, on the other hand, are less useful in providing security for loved ones should the worst happen, said Updegrave. “Since only some of your money goes toward the death benefit, you have to shell out more money to get the equivalent death benefit you receive with a term policy.”
Other experts say that consumers can reduce their life insurance premiums by maintaining a healthy lifestyle and making sure they get enough exercise. Avoiding cigarette smoking, as well, is an important factor in staying healthy.
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