‘I am now getting double minded if I made the right choice’: I have applied for an universal life insurance with critical illness coverage. How can I ensure this is the best decision financially for my future?

Hi Money Minder,

I just applied for a universal life insurance with coverage of $550,000 and critical illness coverage of $50,000. I’m 26, single, no kids, with a car loan of around $30,000 and an annual salary of $75,000.

I’m starting to second-guess my decision. The monthly premium is $145 for 25 years, then no more payments needed. The broker says I could get 8-10% return. I see it as both insurance and investment.

I definitely want to have life insurance to leave something for my kids. Term insurance feels like throwing money away if I don’t die.

Got any financial advice?

Farewell,
Money Minder Seeker**

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the proactive step of applying for universal life insurance with critical illness coverage. It shows maturity and responsibility to think about your financial future at a young age. However, it is understandable that you may have some concerns about whether this is the right choice for you.

Given your age, single status, and no dependents, it’s essential to weigh the benefits of the insurance plan against your current financial situation and goals. While having life insurance to pass on to your future kids is certainly a worthy goal, it’s crucial to ensure that the plan aligns with your overall financial objectives.

In considering the investment aspect of the insurance plan, the projected return of 8-10% seems optimistic and may not be guaranteed. It’s essential to have a clear understanding of the underlying investments and potential risks involved. Additionally, be cautious of relying solely on the insurance as an investment vehicle, as there may be other more suitable investment options available to you.

Regarding your car loan and salary, it’s recommended to prioritize paying off any high-interest debt, such as the car loan, before committing to long-term insurance premiums. This will help free up more cash flow for investments or savings that can benefit you in the long run.

It’s advisable to consult with a financial advisor who can provide personalized guidance based on your specific financial situation and goals. They can help you assess whether the insurance plan is the best option for you and provide alternative strategies to achieve your financial objectives effectively.

Remember, financial decisions are personal, and it’s crucial to make informed choices that align with your unique circumstances. All the best from THE MONEY MINDER – we hope you find the clarity and confidence to make the right decision for your financial future.