Life Insurance – Get It
You will die! I will die! WE WILL ALL DIE. Sorry I sound like a dick, kinda sounds like ww3 or something. There’s that classic saying. 2 things are constant death and taxes. That’s why you need life insurance.
I believe everyone who has a dependent should have life insurance. If you live by yourself and have no kids, its your call. Personally I love the fact that I know when I die, my wife or son will get a cheque to handle the funeral expenses (open bar) and living costs for the foreseeable future.
Most experts believe life insurance coverage should be 10x your income, to invest and hopefully make the same income as you have lost.
Term Or Whole Life Insurance?
I don’t think your saving account should be in life insurance. When we had a life insurance agent come over, he started to tell me how much money him and his family are saving up in a whole life policy. I basically kicked him out instantly. Agents DO make more commission’s on whole life products and will give you some spiel about how they are superior to term.
I believe in simple things – pay X per yr for 20 or 30 years and your beneficiary gets X if you die sometime in that term. The downside they tell you is when you start a new term in 20/30 years your premiums will sky rocket! Yes they will, but by that time you will be self insured right?
Whole life premiums are generally 10-15x the premium of term each year. Obviously age/health/smoker is a factor in both term and whole. So your paying $3000 a year for whole life insurance vs the $300 term policy. Why not get term and invest the extra $2700 per year. You choose the investment and after 20-30 years you will have a bunch of money just from these contributions.
Lets just do the math, for 20 years you put in your $2700 and you average a 10% interest rate. You will have $170,106.75 or at 30 years you will have $488,547.25 sitting there. Will you need to get a new term life insurance now? Hopefully not, keep in mind you should have other investments as well. Did your spouse do the same thing? Double those numbers! Congratulations you are now self insured and don’t have that $300/600 a year payment anymore, go buy yourself something nice!
Something like Life Insurance is very long term, read up about it and shop around. Term and Whole are not the only 2 options out there but are the 2 most talked about. Get ready to roll up your sleeve, give some blood and get your health check up. After sign the dotted line and start sleeping better at night knowing your loved ones are covered!