Life insurance is a contract between you and an insurance company to benefit your beneficiaries in case of your death or when the insurance matures. You have to pay an agreed amount in form of premiums to your insurance company which will be paid out as a lump sum to your beneficiaries in case of your death.

The primary function of getting a life insurance policy is to benefit your beneficiaries once you die but many people are using life insurance as an investment rather than benefiting their beneficiaries after their death.

There are two major types of life insurance which are term life insurance and permanent life insurance. The term life insurance matures after a specified amount of time which could be 5, 10, or even 15 years as agreed by you and the insurance company. The permanent life insurance only matures after your death.

Investing in life insurance as a young person is a great investment. This is why;

1.      Life insurance premiums are based on age and how healthy you are. At a tender age, you are likely to be much healthier than when your age advances. As you keep aging, lifestyle diseases will crop up and other underlying conditions which will increase the premiums to be paid to the insurance company. Paying lower premiums which could end up as a hefty lump sum would be a great investment.

2.      When taking term life insurance, you could benefit from great interest rates that will be valuable once the life insurance matures in a couple of years. This could give you a great lump sum to use and turn into a lucrative investment.

3.      Most banks accept your life insurance as collateral for getting a loan. At a young age, having life insurance will come in handy as collateral on the loans you might want to take out.

4.      Investing with a life insurance policy can get you tax-free withdrawals. You could withdraw the money you've paid into the policy without paying income tax. The earlier you start paying your life insurance premiums the more money you could have to withdraw and use.

5.      You can get tax-free cash-value loans. In the case that you want to withdraw more money on a policy basis and avoid paying taxes on the gains, you can take out a loan. The loans are viewed as accrued interest built over time and are therefore not taxed as income. It's recommended that you at least pay the annual interest to prevent the loan from growing. If the loan exceeds the total cash value, the policy can lapse.

6.      Investing early in life insurance will shield you just in case your income reduces over the years. As the premiums are considerably lower at an early age you wouldn't have to break the bank in the later years in case of a reduced income.

7.      Paying life insurance premiums could make you eligible for tax incentives every year. This would make you pay less tax from your salary as you pay your premiums. That's a double win for you.

8.      Permanent policies like whole life insurance are great investment plans as they include an investment component called cash value. A portion of your premium goes toward the cash value, and the money grows tax-deferred. You can withdraw or borrow the funds to pay for expenses while alive.

9.      Compared to other forms of investments especially retirement investments, the cash value in life insurance policies has flexible cash withdrawals. The cash accrued in your account can be withdrawn at any time with no restrictions and be used for any purpose This cannot be done with other forms of saving especially for retirement as you can only access the funds in your later years like the 70s. You could face tax penalties for withdrawing the money prematurely. On the other hand, life insurance cash value does not have the same restrictions.

These are just some of the reasons you should consider getting life insurance early in life. It is a worthy investment and brings in stability to you and your family.