Jeffrey Manola is an experienced life insurance agent and the founder of Top Quote Life Insurance. His mission when he created Top Quote Life Insurance was to provide online consumers searching for life insurance with the absolute best quotes for term life insurance, permanent life insurance, no medical exam life insurance, and burial insurance. Not only does he strive to provide you with the ...

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Written by Jeffrey Manola
Founder & Licensed Agent Jeffrey Manola

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Jun 29, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right life insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident life insurance decisions. Comparison shopping should be easy. We are not affiliated with any one life insurance provider and cannot guarantee quotes from any single provider.

Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different life insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance-related. We update our site regularly, and all content is reviewed by life insurance experts.

Facts You Should Know

  • Life insurance is designed to provide financial support for the policyholder’s dependents after they die
  • Life insurance is a good investment in terms of peace of mind and making sure your family is protected
  • Life insurance is a bad investment in terms of monetary gains since other assets are likely to offer better rates of return

Life insurance is beneficial for ensuring financial protection for your family. However, you must balance life insurance investment pros and cons to get peace of mind and save money. Life insurance is affordable in most cases, but be careful not to spend your whole budget on life insurance when other investment opportunities exist.

If you’re considering buying life insurance, read below to understand how life insurance functions as an investment, term and whole life insurance pros and cons, and how you can maximize your investment potential.

You can also enter your ZIP code into our free quote comparison tool above to find a life insurance investment policy.

How does life insurance work?

Life insurance is designed to provide financial support for the policyholder’s dependents and interests after they pass away. There are multiple types of life insurance, and each policy will function differently. For example, the two main types of life insurance are term life insurance and permanent life insurance.

Term life insurance is a non-permanent life insurance policy that lasts for a specified period, usually between 10 and 30 years. They are straightforward policies with minimal features and affordable, level rates. However, the policy will end at the end of the term. Then the policyholder must choose to convert to a permanent policy, buy another term policy, or go without coverage.

Permanent life insurance will last for the policyholder’s life as long as the premiums are paid. Some permanent policies include whole life insurance, universal life insurance, and variable life insurance. Each has a cash value component that will grow over the policy’s life. In addition, some policies will offer investment options to provide an opportunity for faster growth.

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Is life insurance a good investment?

Using life insurance as an investment is possible, depending on your current financial situation and financial goals. Some life insurance policies come with the option of investing the cash value in specific investment vehicles to further grow the policy’s cash value.

After the cash value has had some time to grow, the policyholder can take loans out against the policy’s cash value for emergency expenses, large purchases, and more. Therefore, this option may make the policy worth it to some people who want access to money without the credit check process.

In addition, your life insurance policy is intended to provide your dependents with income after you pass away. Therefore, some people may consider this a life insurance investment even if they will never see their purchase results.

Is term life insurance worth it? Term life insurance is the most affordable type of life insurance. It provides a death benefit, but there are no investment options to grow wealth or accumulate savings. Therefore, it won’t result in cash value, but it can protect your peace of mind.

Is whole life insurance a good investment? Whole life insurance has slightly higher rates with cash value. However, while the cash value grows, the fixed interest rate won’t result in a significant return compared to other permanent life insurance policies. With that being said, it is a safe choice.

What are the pros of buying life insurance?

Some of the pros of investing in life insurance include:

  • It provides financial protection and peace of mind. Your beneficiary will receive a large lump sum to help them maintain their lifestyle after their death. In addition, the death benefit is tax-free.
  • It is affordable. Depending on your age and coverage type, you could be paying as low as $20 per month for life insurance.
  • It’s easy to apply. Online quote tools, like the one below, make it easy to compare multiple companies at once. In addition, many companies allow you to fill out your application online from your home.
  • It rounds out a financial plan. Your other assets may consist of accounts that take time to grow. Life insurance ensures financial security for your family today.
  • It can help you save. If you buy a permanent life insurance policy, the cash value account could help you save for large purchases and unexpected costs.

As you can tell from the list above, the most significant advantage of life insurance is making sure that your family is protected. However, there are many other ways to do this with investments that give higher monetary returns, so carefully explore your options.

What are the cons of buying life insurance?

Some of the cons of investing in life insurance include:

  • It can be expensive. If you’re older or your health is declining, your life insurance rates could rise significantly. The best way to ensure affordable rates is to pay attention to your health and buy early.
  • Permanent life insurance is expensive. Permanent life insurance is the only type of insurance that provides investment options. However, it is more costly than term life insurance regardless of your age or health.
  • Other investments grow faster. The rate of return for your policy’s cash value is lower than investing in another investment option, such as Roth IRA.
  • It’s complex. Depending on what kind of life insurance you want, it could be challenging to understand the details of your policy or how it works.

Life insurance is not without its flaws. There are plenty of other investment options that may fit your financial portfolio better. However, it is an affordable and accessible option for most people.

Your one-stop online guide for life insurance quotes. Get free quotes now!

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Should I get life insurance?

Is life insurance worth it? It depends on your goals for the policy. In most cases, life insurance can be an excellent investment to ensure your family is taken care of after your death. However, it is unlikely to yield significant opportunities for wealth.

High-net-worth individuals may use permanent life insurance to minimize estate taxes, but term life insurance is generally the best option for most people.

The best way to buy life insurance is to buy early and tell the truth on your application. The younger you are when you apply, the more affordable your rates will be. In addition, make sure not to buy too much coverage. Finally, you should balance your budget for investing so that you can afford some life insurance coverage and still have enough to invest in retirement accounts.

If you’re considering investing in life insurance, enter your ZIP code into our free quote comparison tool below to find affordable rates today.