Generative AI programs like ChatGPT have firmly established themselves as go-to resources for consumers seeking answers to quick questions. Financial advice is no exception.
Given ChatGPT's inconsistency in response quality, however, it's important to ensure the recommendations clients incorporate into their financial plans are accurate.
Implementing misinformed or inaccurate advice can have long-term consequences and create financial problems down the line.
To preview the information consumers may encounter with generative AI, I prompted ChatGPT to act as a financial advisor and provide guidance on life insurance, and I gauged how the responses measure up under a professional opinion:
Question and Answer
Question: What type of life insurance policy is best for a single person with no dependents?
ChatGPT Response: For a single person with no dependents, the need for life insurance is generally lower compared to someone with financial dependents.
However, there are still reasons why a single individual might consider having life insurance, such as covering final expenses, paying off debts, or leaving a financial legacy.
In such cases, a term life insurance policy may be the most suitable option. Here's why.
Term Life Insurance:
a. Affordability: Term life insurance is typically more affordable than permanent life insurance. It provides coverage for a specific term, such as 10, 20, or 30 years.
b. Temporary coverage: Since it offers coverage for a set period, term life insurance is well-suited for specific needs, like paying off a mortgage or other debts, which might be a concern for a single person.
c. Convertible options: Some term life policies offer the option to convert to a permanent policy later on if your circumstances change and you find the need for longer-lasting coverage.
d. Focus on protection: Term life insurance is designed to provide a death benefit to beneficiaries if the insured passes away during the term of the policy.
