blog header for michael morrow's blog post, "5 reasons for life insurance."

Despite popular belief, life insurance policies do not serve a singular purpose. While they are primarily used to provide vital funds to families whose loved ones have passed away, these policies can also serve as an excellent addition to a personal financial portfolio, collateral for a personal or business loan, and so on.

Here are five reasons you should consider opening a life insurance policy as soon as possible:

They are guaranteed to grow. Similar to a traditional IRA, a life insurance policy’s cash value is guaranteed to grow on a tax-deferred basis and never decrease in value, no matter how dismal the economy may appear. This is because the growth of a policy’s cash value is dependent on the payments the owner makes. Therefore, a life insurance policy is an investment that can act as a safety net for your financial security.

They can be leveraged to meet greater financial goals. If you are hoping to start your own business or even foresee some financial trouble later on in life, a life insurance policy can be used to cushion the blow of — or entirely cover — either expense.

There are some stipulations to this process, however. While you may borrow against your policy without entirely cashing it in, you are held responsible for repaying that amount before the end of your lifetime. If that requirement is not met, the overall value of your policy will be decreased, leaving your family with fewer financial benefits in the event of your death.

They can aid you in paying for college tuition. Borrowing against your life insurance policy is also an excellent option for financing your child’s college education. Similar to traditional federal and private loans, you will be required to pay interest on the amount of money you borrowed. If interest goes unpaid, you run the risk of compounding your loan — or paying interest on your accrued interest. Therefore, you should ensure that you are financially secure enough to handle such payments prior to making a decision.

They are an investment, not an expense. Although starting a life insurance policy may certainly sound like an expense, seeing as you are required to make monthly payments to keep the policy, the overall benefits greatly outweigh the costs — which, frankly, may not be that high to begin with, depending on one’s coverage, provider, and physical health.

The sooner you buy, the more insurable you will be. One of the last things the majority of young individuals want to think about — let alone discuss — is preparing for anything related to the end of life. However, purchasing a life insurance policy does not need to be viewed as morbid, but as a safety net that could greatly benefit its owner in the future.

With that in mind, it would be wise of more people to purchase life insurance policies as soon as they are financially able, as they would not only have a higher likelihood of being approved, but would have the ability to lock in lower premium rates as well. This also gives them great flexibility if they decide to expand their coverage to a spouse or invest in additional benefits down the line.