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11/05/10 --- Some recent economic news brings into question the validity of investing in a life insurance policy. Let's take a look at the future of life insurance as an investment...
In recent weeks, especially after the Federal Reserve announced its "quantitative easing" policy, the U.S. dollar has lost significant value. The Federal Reserve's policy requires extra "creation" (printing) of currency, which usually leads to inflation.
What does this have to do with life insurance? If there is major inflation, the beneficiary will effectively receive less money. However, such insurance policies usually start at $50,000 - which is likely to still cover all final expenses, even after inflation.
Other investment options seem more desirable today, with stocks and gold rapidly rising in value. On the other hand, life insurance offers a safer alternative; how long ago did real estate and mortgage derivatives also seem like great investments?
The interest on money market accounts and bank savings accounts has become very minimal, often paying less than a half percent. Even at fairly high rates with a long lifespan, life insurance typically produces a larger net gain than such accounts.
Overall, life insurance may not be the most profitable investment, but it's safe and doesn't require a large initial expense. It still offers a reliable way to ensure final expenses can be paid.
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