Difference Between Savings and Life Insurance as Per William Schantz

Difference Between Savings and Life Insurance as Per William Schantz

Young people living in the United States of America are taught about the benefits of financial savings or setting up a savings account from a very young age. However, many young adults claim that they know very little about what life insurance is, who it is for, and how it is different from investing in a traditional savings account.

According to William Schantz, while a savings account will offer annual or monthly benefits to an individual, life insurance can provide long-term financial security to the person and their loved ones.

Continue reading below to learn how savings is different from life insurance and which plan is better for you. 

Difference Between Savings and a Life Insurance as Per Schantz

Although many people assume that life insurance offers benefits after an individual has passed away, this is far from the truth. Like a savings account, life insurance can provide financial benefits during a person’s lifetime.

However, according to Schantz, the two forms of investments have many differences. Five of the main differences between savings and life insurance are as follows:

1.      Taxes 

A savings account and a life insurance policy allow a person’s wealth to grow; however, investing in a savings account comes with certain strings attached.

A person’s interest on their savings account is liable for a tax deduction. This means that whatever amount the person can grow through investing in a savings account will be subjected to legal tax deductions.

However, on the other hand, the financial growth in wealth that comes through investing in a life insurance plan is not subjected to any tax deduction. As a result, investing in a life insurance plan instead of a savings account could be more profitable and beneficial for many people. 

2.                  Growth Rate 

Whether a person invests in a savings account or a life insurance plan, their financial wealth is bound to grow. However, according to William Schantz, the growth rate is substantially different for either of the two investment plans.

If a person invests in a savings account in the United States of America, they will have to deal with a low growth rate of just 0.1% average returns. However, if the American citizen invests in a life insurance plan instead, their wealth is expected to grow at a 6% to 8% average return.

As a result, investing in a life insurance plan instead of a savings account would allow a person’s wealth for greater financial growth and safety. 

3.                  Associated Costs 

One major attractive thing about investing in a savings account instead of an insurance plan is that the individual has to incur no costs or pay absolutely no fee when setting up a savings account.

While on the other hand, applying for a life insurance plan does come with a particular cost or fee. Due to this, many young individuals who do not have high incomes usually prefer investing in a savings account over a life insurance plan.

4.                  Death Benefits 

The most significant benefit of investing in a life insurance plan is that it pays out a death benefit. This provides great financial security to the family of the deceased individual and helps them set up their lives, start a business, make an investment, or pay for school.

On the contrary, investing in a savings account offers no such death benefits. Due to this, investment in a life insurance account should be preferred over a savings account by someone who is the primary breadwinner of their family. 

5.                  Ease of Accessibility 

Once a person has invested in a life insurance plan, they have to wait at least ten years before they can legally access the amount. However, this is not the case with a savings account.

A savings account is completely liquid and can be accessed at any point that a person requires.

Final Thoughts by Schantz

According to William Schantz, it is not about whether one form of investment is safer or more beneficial than the other. Instead, an individual should invest in both types of investment plans for maximum financial security and to live a comfortable life.