Is Life Insurance A Waste of Money?

Last updated on: August 22, 2012 at 11:14 pm by Tim

Is Life Insurance A Waste of Money? 2012-08-22T23:14:23-05:00 Tim

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

Have you ever bought something that didn’t do what you wanted it to do? It’s frustrating when something doesn’t work the way it’s supposed to right out of the box.

When reality doesn’t meet our expectations, we get disappointed.

So when I heard a 50-year-old man complaining that he wasted 20 years of his life paying into a term life insurance policy, I couldn’t help but think: Is life insurance a waste of money, or did he just not have the right expectations going into it?

What Good is Life Insurance?

Not everyone needs life insurance. A single 24-year-old with no debt and no family might not want to pay into a life insurance policy – especially if they don’t expect to have a family any time soon. A 30-year-old mother of three who works as a physician would probably want to have a very large life insurance policy in case she passed away before her children were grown.

The point of life insurance is to provide for your loved ones after you pass away. Your goal may be to provide enough to pay off your home and to pay for your children’s college if you passed away early.

But here’s what life insurance is not: it is not a free pass to neglect saving for those events. It’s simply irresponsible to treat life insurance as such.

Remember that 50-year-old who grumbled about paying into a life insurance policy for 20 years and claimed that it was a ‘waste’ of his money? He didn’t have any retirement savings, college savings, or emergency fund. He was expecting his life insurance to do something it wasn’t designed to do. He didn’t take responsibility for his lack of discipline in saving.

What that person didn’t realize was that his life insurance policy gave him exactly what he paid for all those years: peace of mind.

Every month that you pay your life insurance premium, you’re paying for the peace of mind in knowing that your family would be covered if you passed away. That’s what you’re paying for. You’ll never see the money…you have to die before it’s paid out. A simple term life insurance policy gives people exactly what they pay for. Expecting anything more would be unrealistic.

End of rant.

Ok, seriously though. Term life insurance isn’t a waste of money if you set your expectations correctly. That’s like thinking your pick up truck is a waste of money because it doesn’t get 100 miles per gallon. It wasn’t designed to get 100 mpg. It was designed to move you from point A to B. We set ourselves up for disappointment when our expectations are out of sync with reality.

The Next Step: Researching Life Insurance

I strongly encourage you to do some research about term life insurance. My friend Jeff at Good Financial Cents is hosting the Life Insurance Movement – an initiative to educate people about the importance of life insurance. Here are some helpful articles that can help you in setting your expectations about life insurance.

Life Insurance 101: Types of Life Insurance Explained

Why I Purchased a $2.5 million dollar life insurance policy.

Personal Finance

Previous Post

August 22, 2012

Do You Have a Financial Accountability Partner?

Next Post

August 27, 2012 How to Avoid Probate: Creating a Revocable Living Trust

Browse Our Archives

Select a Category ALL Bible and Money Biblical Perspective Book Reviews Budgeting Business Corner Churches and Pastors Debt Encouraging Scriptures Entrepreneurship Faith and Economics Family and Money General Personal Finance Giving Inspirational Quotes Investing Making Money Other Personal Finance Retirement Reviews Round Up Saving Self-Improvement Taxes Uncategorized

Select a Month January 2019 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 November 2016 October 2016 May 2016 March 2016 February 2016 January 2016 January 2015 November 2014 October 2014 August 2014 April 2014 March 2014 January 2014 December 2013 November 2013 October 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010

TAKE THE

Religious Wisdom Quiz

True or False: According to Hebrews, faith is the substance of things hoped for and the evidence of things not seen.

Select your answer to see how you score.

FALSE TRUE