When is life insurance considered a financial asset?

Life insurance by itself isn’t typically categorized as a financial asset, but in some cases, it qualifies. Right Choice Insurance and Taxes serving Tuscon, AZ wants you to understand when life insurance adds a financial asset to your portfolio.

The term asset class refers to a purchase you made today that you anticipate will have greater value in the future. Assets should appreciate over time, but some could depreciate.

Term life insurance can qualify as a financial asset when it has a cash surrender value. Whole life insurance can qualify as a financial asset when it has a cash value account attached. The latter can be either a savings, money market or investment account.

Both of these types of life insurance guarantee a future value for the policy while you live. If you can only use the policies for your beneficiary, then you could argue it qualifies as their financial asset, but financial planners and insurance agents do not really look at it that way.

You can only consider a life insurance policy with a surrender value or a cash value as a financial asset. A financial asset contributes to your financial portfolio, which, in turn, adds to your net worth.

Adding to your net worth helps you overall in finance and in life. You can more easily obtain loans and credit cards when you have better credit and a higher net worth.

Consult with the insurance agents at Right Choice Insurance and Taxes serving Tuscon, AZ to learn which life insurance product can help you the most and which qualifies as a financial asset. Call us today.

Do I need Life Insurance As a Young Person WITHOUT Dependents?

Many young people may feel that life insurance isn’t a true need until you get older or have a family. However, nothing could be further from the truth. Most of us won’t leave this earth as young people. As a result, it pays to put safeguards in place to help us as we age and grow families. Waiting until we’re older to invest in this beneficial insurance can significantly differ in how much we’ll pay. Right Choice Insurance and Taxes of Tuscon, AZ is committed to educating young people about life insurance benefits.

The ABC’s of Life Insurance

Life insurance is less expensive the younger you are. This means that the best time to purchase life insurance, in terms of cost, is while you’re still in your twenties or thirties. Beyond your thirties, life insurance becomes more expensive to purchase. A key reason to purchase life insurance as a younger person can lock in a good rate that you will continue to pay for years, depending on the type of life insurance you invest in. Term life can be a good purchase for a young person because you will pay that same small rate over the insurance policy term once you lock in the lower rate. In essence, investing in life insurance at a young age grants you lower premiums and reduces the cost you’ll pay on life insurance over the course of your lifetime.

Other Benefits…

Life insurance also has the ability to reduce the worry and stress associated with funeral costs and other final expenses. Life insurance is cheaper for young people because there’s less risk of insuring a healthy young person. Term life insurance is often considered one of the better investments for young people because the low cost of purchasing hundreds of thousands of dollars in coverage makes it very affordable to purchase and keep this insurance well into your elder years. Suppose you have questions about purchasing life insurance as a young person, give us a call. We’re here to help.