Life insurance should be used to pay off debt and invest in index funds
Ideally, I would want our children to utilize the money from our life insurance policies to pay off their debts and invest in index funds when they receive them.
- Before the birth of our first child, my husband and I decided to get life insurance to ensure the safety of our family.
- Now that we have two kids, I can rest easy knowing that they will be well taken care of in the event of our untimely demise.
- Two items are on my wish list for them if they ever get our life insurance: paying off any outstanding debt and investing the remainder in index funds.
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My spouse and I discussed getting life insurance as soon as we were married. If one of us died suddenly, we wanted the other spouse to be allowed to remain in the house that we had just purchased a year earlier.
The need for life insurance became clear to me when I began my career as a financial advisor shortly after we were married. However, I was no stranger to the idea. As a young adult, my father was diagnosed with terminal liver cancer and had taken his life insurance money out early to fund a round-the-world trip with my brothers.
After these incidents, my husband and I decided we couldn’t risk our health any longer and purchased health insurance as soon as we could. Our health allowed us to choose a 20-year, $1 million term life insurance policy. Check the mighty Oak Park for more funds.
We now have two little girls after acquiring life insurance a few years ago. As a former high school personal finance teacher, I’ve given much attention to the lessons I want to impart to my children about money management and management.
My husband and I are highly transparent, and we have frequent “money dates when it comes to finances.” We want our children to learn the significance of handling money properly while having fun.
The things I would want my kids to accomplish if they ever received our life insurance funds
It’s my goal that our children would use the money from their life insurance policies to pay off their debts and put the remainder in index funds if they were mature enough to manage their own money.
Getting rid of debt
When we paid off our consumer debt, it was as if a cloud of tension and dread had been removed from our lives. This is why I feel so passionately about paying off debt. We’ve also been more involved in the financial independence movement during the last two years, and we’re focused on paying off debt and investing aggressively to retire early, perhaps.
To begin with, I would prefer that my children pay off their college loans, auto loans, and credit cards. Interest rates on a particular debt, particularly credit card debt, tend to be the most outrageous. I know how liberating it is to be debt-free, and I want my children to be able to experience it as well.
Indexing your portfolio
I’d want my children to put the remainder of their inheritance into index funds. They often outperform other assets at a lower cost. Investing in funds that beat the market is complex, and the costs associated with doing so are excessive. I want to introduce my children to investing.
There are several ways in which this money may be used in the future, including purchasing a property, establishing a company, or saving for the future.
My children would also be able to live off a portion of their wages if this became a reality. Suppose they put the bulk of their inheritance into investments. In that case, they should be able to live off of that money for the foreseeable future by withdrawing a little sum annually from their investments.
My girls would be able to take time off from earning money if they chose to leave occupations they didn’t like, remain at home with their children, travel, or vacation from a career exhausting them.
Having life insurance gives your loved ones a variety of possibilities, one of its most appealing features. It doesn’t even have to be a significant policy to affect their lives significantly. What matters most to us is that our children under the age of 18 would be adequately cared for if they were left in the care of someone else.
Additionally, if they are above 18, a life insurance endowment might help them gain financial independence and stability, which they could then pass on to their children.