As a parent of small children, life insurance is a topic that has frequently crossed my mind. However, the concept of choosing the “right” life insurance policy, and selecting a policy that is adequate to meet the needs of my young children should the unthinkable occur is a decision I’m a little uncertain of. As I’ve looked into the topic further, I’ve found that I’m not alone in my struggle. Over 1/3 of Americans have either delayed purchasing new or additional life insurance coverage due to a lack of knowledge or understanding on the topic. And as I began to examine the various options out there, it’s not wonder why the topic is a little fuzzy to many.
Whole Life Insurance Often Pays Dividends Making The Insurance Policy An Investment Opportunity
Through my research, I was led to one product that has the obvious result in providing for my children should I be met with an untimely death, but it also provides upside investment potential through dividend payouts as a secondary mechanism to the insurance program. Participating whole life products often have higher premiums but are attractive because many offer dividend payouts. The amount paid in dividends can vary based on how much the company earns in investment earnings, and a conservative assumption of annual death benefit claims as well as the company’s general operating expenses, but overall offers more financial upsides than a term life insurance plan that simply offers a death benefit with no cash advantage.
Dividend Payouts From Life Insurance In A Low-Interest Rate Environment
When examining the life insurance plan that works best for your own individual financial situation it is also important to recognize that today’s current low interest rate environment can certainly impact dividend payouts. The insurance companies themselves will be making less money on their investments, which in turn means that they will pay out less in dividends until the interest rates go up. However, it’s also important to recognize that the low-interest rate environment impacts all “low-risk” investments such as Government bonds, savings accounts, CD’s, Money market accounts etc. Meaning, you may not get a higher rate of return on other similarly conservative investment options making whole life policies out to be still rather attractive.
Life Insurance is an essential way to protect and transfer your wealth to your loved ones, while still potentially meeting the goal of accumulating and growing your wealth. For more information on this unique investment option, speak to a Redhawk Wealth Advisor near you today.