Maybe you don’t need life insurance – right?
Well I guess you don’t if you’re single, have a good chunk of money and plan to live a long life and a happy one.
And there’s the rub! If you are like 99% of the population, you can’t fit all of those prerequisites and even if you did your hope of adhering to such a plot is zero. So I’d say you do need life insurance.I’m going to tell you why and I’m going to give you some tips to buy the right kind and to save money doing it. Good deal!
You are young now and unattached. No? Well then you have responsibility to provide for your spouse, partner and family come hell or high water. If you step off the curb at lunch today, get swiped and die tomorrow morning how do you plan to do that?
Your wife is a stay-at-home Mom and hasn’t worked since the kids were born. Oh oh! How is she going to replicate your income overnight? Who is going to raise the kids? Where is your spouse going to find the wherewithal to put them through college. Let’s hope she can get remarried quick, right? Sorry, didn’t mean to upset you! BTW, will she have enough to pay your funeral expenses?
Let’s stop this harangue! Yes, you need life insurance and you need it ASAP. So let’s get down to how, what, where and when.
Life insurance can be divided in to two basic categories – term insurance and cash-value insurance or whole life insurance).
OK – which category is right for you?
Almost certainly, I would say buy term life insurance.
Term is simple to understand, is low cost and quickly bought.
Term life insurance has lower cost than cash value insurance because it is purely a policy on the life of the person insured. No bells or whistles. There is no cash value added over time and the policy will expire worthless at the end of it’s specified term (as long as 30 years).
Term will cost you an annual premium (normally level over the term of the policy), and if you die, a lump sum is paid to your beneficiaries. The policy can be renewed at the end of its term. Yes, for a higher premium but without an additional medical examination (big advantage!).
Cash Value Insurance or whole life comes in all kinds of variety. Limited only by underwriters and insurance company marketing departments the parade is endless. The underlying premise of whole life is that the policy accumulates cash value as the policy ages. The policy is a combination of a savings plan and protection. The problem is that this makes side by side comparison of benefits and costs extremely complicated and difficult and the investment element has a low performance rating when compared with other available vehicles.
In summary, whoever you are you do need life insurance. Don’t put it off any longer. Get quotes on term life and rank them. Accept a reputable company with the lowest rate.
Avoid cash value policies and concentrate your efforts on finding the best vehicles for your savings. By following this overall plan you will be providing essential protection for your family at the lowest possible cost and moving in to a savings and investment mode to optimize your family’s accumulation of wealth. This separation is a key to success.
