Life
13 min read

Is Life Insurance Worth It?

Written by
Team Waffle - Ryan
Published on
January 10, 2023

Life insurance is basically a way to make sure your loved ones are taken care of financially if something happens to you. It's like a safety net for your family. If you have a life insurance policy and you pass away, the policy will pay out a certain amount of money to the people you've designated as beneficiaries. That money can be used for all sorts of things, like paying off debts, covering funeral costs, and providing financial support for your family. No one likes to think about their own mortality, but the reality is that anything can happen at any time. Having a life insurance policy in place can give you peace of mind knowing that your family will be taken care of if something happens to you.

There are different types of life insurance, like term life and permanent life, and you can choose the one that works best for you and your situation. It's not the most fun thing to think about, but it can give you some peace of mind knowing that your loved ones will be taken care of if something happens to you.

What is in store:

1. Factors when deciding if life insurance is a good investment
   a. Age and health
   b. Financial responsibilities
   c. Income and financial stability

2. Advantages and Disadvantages of life insurance
   a. Advantages of getting life insurance
   b. Disadvantages of life insurance

3. Alternative to life insurance
   a. Trust fund
   b. Retirement funds
   c. Secret cash stash
   d. A lovely letter

4. FAQ
   a. What age is best to get life insurance?
   b. Do stay at home mom’s need life insurance?
   c. How much life insurance coverage should you get?

Factors to consider when deciding if life insurance is a good investment

1. Age and health: 

When it comes to life insurance, age and health are definitely two big factors that can impact your policy. Generally speaking, the older you are, the more expensive your life insurance will be. That's because the older you are, the more likely you are to pass away – and the insurance company wants to make sure they're not losing money on the deal. The same goes for your health – if you have some pre-existing health conditions, your policy might cost a bit more because you're considered a higher risk. 

2. Financial responsibilities

If you have a lot of debt (like a mortgage, student loans, or credit card debt), having a life insurance policy can help ensure that those debts are paid off if something happens to you. That way, your loved ones won't be stuck with the burden of paying off those debts on top of everything else. Similarly, if you have dependents – like a spouse, children, or even elderly parents – you might want to consider getting a life insurance policy to help provide for them financially if you're not around.

3. Income and financial stability

Financial stability and income can really help decide the coverage amount, term length, and insurance type based on what works best for you. For example, If you're the primary breadwinner in your household and you suddenly pass away, your family's financial stability might be at risk. That's where life insurance can come in – it can provide a financial safety net for your loved ones, so they have one less thing to worry about. Similarly, if you have a high income, you might want to consider getting a higher amount of coverage to make sure your family is taken care of financially. On the other hand, if you have a lower income, you might want to consider a policy with a lower death benefit. It's all about finding a balance that works for you and your situation.

4. Length of coverage needed

Life insurance term length is something you’ll need to really think about when choosing the best kind of life insurance for you and your family. There are generally two main types of term lengths: short-term and long-term. Short-term policies (also known as "term life insurance") last for a set number of years, like 10, 15, or 20 years. They're usually a bit cheaper than long-term policies, but they also expire at the end of the term. That means if you outlive the policy, you'll have to get a new one (assuming you still need coverage). Long-term policies (also known as "permanent life insurance") don't expire – they last for your entire lifetime. They're usually more expensive than short-term policies, but they also come with some additional benefits like the ability to build cash value over time.

So when it comes to life insurance, there are definitely a lot of factors to consider. You'll need to think about things like your age, health, debt, dependents, financial stability, and income, just to name a few. It can be a lot to wrap your head around so spend the time to really think about what is going to be best for you.

Life insurance advantages and disadvantages

Advantages of life insurance

So, if you're on the fence about getting life insurance, you will want to remember there are some major advantages to it. The biggest advantage like we talked about before is if something were to happen to you, your policy would pay out a sum of money to your designated beneficiaries. They could use that money to pay off debts, cover funeral expenses, or just provide some extra financial support. Depending on the life insurance type you could even use it as an investment tool. 

And the best part? Life insurance can be surprisingly affordable. How affordable? A 20 year, $1,000,000 coverage term life policy with Waffle for example starts at $23/mo for a healthy 30 year old.There are all sorts of other options out there too so you can find a policy that works for you and your budget. Plus, it's not just about the money – having a life insurance policy can give you peace of mind knowing that your loved ones will be taken care of if something happens to you. So if you haven't already, it might be worth considering.

Disadvantages of life insurance

Well, if I had to come up with some disadvantages of life insurance, I'd say the biggest one is probably the fact that it only pays out if you die. Talk about adding insult to injury! It's like saying, "Hey, congratulations on not being alive anymore to enjoy the money we're giving your loved ones! Here's a pat on the back from the grave." But seriously, life insurance can be a helpful financial tool for protecting your loved ones, but it's important to carefully consider your options and make sure it's the right fit for you.

Alternatives to life insurance

There are a few alternatives that are also options if life insurance isn’t feeling like the best route.

  1. A trust fund: If you really want to rub it in the faces of your loved ones that you're no longer around, you could always set up a trust fund and make them wait until they're a certain age to access it. "Sorry kids, I know you're starving and homeless, but you'll just have to wait until you're 35 to get your hands on that inheritance. Muahaha!"
  1. Retirement Account (401k, Roth IRA, etc): Using a retirement account as life insurance might seem like a good idea at first glance - "Hey, I'm saving for my own retirement AND protecting my loved ones in the event of my death? Double win!" But here's the thing: retirement accounts are meant for, well, retirement. They're not designed to provide financial protection for your loved ones in the short term. If you use your retirement account as a substitute for life insurance and you end up passing away before you've had a chance to retire, your loved ones could be left in a tough financial position. They might not have access to the money in your retirement account for years, and even when they do, it might not be enough to cover their needs. So while it's always a good idea to save for retirement, it's important to also have a plan in place to protect your loved ones financially in the meantime.
  1. A secret stash of cash: If you're feeling especially mischievous, you could always hide a bunch of cash around your house and make your loved ones go on a scavenger hunt to find it after you're gone. "Good luck finding the $10,000 I hid in the toilet tank, kids! I hope you enjoy the bubble wrap I used to pack it in."
  1. A handwritten letter: If all else fails, you could always just leave a heartfelt handwritten letter explaining how much your loved ones meant to you. It won't pay the bills, but at least they'll have something to cry over as they struggle to make ends meet. "Dear loved ones, I'm sorry I'm not around to help you financially, but I hope this heartfelt letter makes up for it. Love, [Your Name]"

So if I had to sum it up, I'd say that alternatives to life insurance are riskier because they're, well, alternatives. They're not the tried and true method of protecting your loved ones financially in the event of your untimely demise. Trust funds can be tricky to set up and maintain, secret stashes of cash can easily be forgotten or lost, and handwritten letters can be, well, lost or ruined. With life insurance, you at least have the peace of mind that your loved ones will be taken care of financially, even if you're not around to see it. Plus, you won't have to worry about your ghost haunting them because they couldn't find the cash you hid in the washing machine.

Conclusion

In conclusion, while life insurance might seem like a bummer (it only pays out if you die, after all), it's actually a pretty smart financial move. It's the gift that keeps on giving, even after you're gone. It can provide peace of mind and financial protection for your loved ones when they need it most, and it can give you the confidence to live your life to the fullest, knowing that your loved ones will be taken care of if something happens to you. So don't be a ghost of a chance - get yourself some life insurance and give your loved ones the gift of peace of mind. It's the least you could do for them. Get a free estimate in a few seconds or fill an application all online in about 5 minutes with Waffle and see what some of your options are.

FAQ

What age is best to get life insurance?

Well, if you're wondering when the best time to get life insurance is, the answer is simple: yesterday! Okay, okay, we understand that might not have been possible. But the sooner you get life insurance, the better. After all, none of us are getting any younger (despite our best efforts), and the older you are, the more expensive life insurance can be. So, if you have a spouse, children, or anyone else who depends on you financially, it's important to get coverage as soon as you can. Plus, it's one less thing to worry about. So go ahead and take the plunge – your loved ones (and your wallet) will thank you.

Do stay at home mom’s need life insurance?

Stay-at-home moms, listen up! Just because you're not bringing home a paycheck doesn't mean you aren't incredibly valuable to your family. In fact, if something were to happen to you, the cost of replacing all that you do – from carpooling to cooking to laundry and everything in between – could be astronomical. That's why it's important for stay-at-home moms to have life insurance. It can help ensure that your family is financially secure in the event of your untimely demise, and give you peace of mind knowing that they'll be taken care of. Plus, it's one less thing for you to worry about while you're busy keeping your household running like a well-oiled machine.

How much life insurance coverage should you get?

Well, that's a tough question! The amount of life insurance you should get really depends on your personal circumstances and financial goals. Some people like to get a policy that covers their mortgage, while others want to make sure their kids are taken care of until they reach a certain age. Ultimately, it's up to you to decide how much coverage you need, but a good rule of thumb is to get enough to give your loved ones the financial security they need in the event of your untimely demise. Just make sure you don't overdo it, because nobody wants to be buried under a mountain of debt.

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Waffle, with offices located at 43 West 23rd Street, New York, New York 10010, USA is a licensed insurance producer and not an insurer. Waffle operates through Waffle Labs Inc (National Producer Number: 19499260). Waffle does business in California as Waffle Labs Insurance Agency. Coverage is subject to all the terms, exclusions and conditions of the insurance policy. Please see the sample policies for further information.