Quora Answer: Which is Better: A Monthly Contribution to Income Protection or Investing the Same Money?

The following is my answer to a Quora question: “Which one is better: a monthly contribution to income protection, or investing the same money every month?”

That depends entirely on your intent, and your need.  In the beginning, you need some sort of liability protection, and coverage for loss of income.  Pure investment does not address that.  For example, if you have saved a $100 a month for three months, and then had an accident, you only have $300, which is not even close to what you need to replace your income and pay your immediate costs.  If that $100 a month was paid into a policy, it would have at least meant $100,000 coverage.

When you have a substantial investment portfolio, your need changes, and your priorities evolve.  In such a case, you buy policies to complement your portfolio, because now, you have a legacy to protect.