Wednesday, October 26, 2011

Universal Life Insurance ... do I REALLY need it?

I feel that I'm faced with a bit of a predicament.  And I'm not sure what to do.  Last year, DH and I along with our youngest son J, signed up for Universal Life Insurance Plans.  Based on my knowledge of Universal Life Insurance, one benefit is that after a number of years (depending on your monthly contributions), you no longer have to contribute because there is an investment component with UL (Universal Life) Insurance.  For example:  Life Insurance premium costs $50/month.  If you contribute $100/month (which is actually what we're doing right now), $50 goes towards the life insurance and the remaining $50 goes towards your investments.

The plan is that the investments grow to the point where you no longer have to pay your premiums and the interest from the investments covers your life insurance premiums.  I'm definitely not an expert at this, but I think that's the overall picture.

So going back to the situation, currently DH, J and myself each contribute $100 to our life insurance plans, for a total of $300.  I'm now wondering if this money could be better used elsewhere.  I have life insurance through my work and so does Arman.  We could probably get another life insurance plan that's much cheaper.  And J, well I don't know if it's necessary for him to have a life insurance plan (he's 2 years old).  We decided to get him the plan based on the investment component of it.

Even as I type this out, a part of me is thinking that I should just keep the plans and I feel that I may regret canceling the plans.  If I do cancel, I will not get any of the invested money back.  That would mean a couple thousand dollars gone.  At the same time, if I keep the plan, I'm just losing more money the more I delay the cancellation.

I need help.  Maybe I'll see if there's a way to cut back the investment portion of our contributions and just pay the premiums.  Not sure what to do.  These are the moments where I wish DH was more involved with our finances so that we could discuss thoroughly.  He'll go along with whatever decision I come to.

1 comment:

  1. Really amazing post, I am going to bookmark your post see u again thank you so much.
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