Are You Wasting Money by Not Buying the Best Life Insurance?
What’s
the best life insurance you can get? The life
insurance industry does a good job of making it difficult for you to
answer
this question. But today, we’re going to sort through the different
types of
life insurance and figure out which is the best.
There are two basic types of life insurance, term insurance and permanent life insurance. Let’s examine both types, and then determine which the best life insurance is.
We’ll start by examining permanent life insurance.
PERMANENT LIFE INSURANCE
Permanent life insurance is pretty much like it sounds. It provides you with life insurance that never expires unless you stop paying your premiums, cancel the policy or you pass away. Most types of permanent life insurance also have a savings component that builds up savings for you.
The Three Most Common Types of Permanent Insurance Are:
(click on each type to learn more)- Whole
life insurance – Whole life offers insurance that is
in effect until you pass away, or you reach age 100 (whichever comes
first). There is also a cash value (savings) that accumulates
in the policy. Typically insurance salesman will pitch this
type of insurance by saying something along the lines of it being a way
to ‘force you to save’ for things like retirement or for your kid’s
educations.
- Universal life insurance – Is very
similar to whole life
except that all of your premiums go into the savings portion of your
policy and the insurance company withdraws the funds need to pay for
the actual life insurance from the savings in the policy. This makes
your payments more flexible. Universal life also gives you
more options for investing your money.
- Variable
Life insurance – Is a type of whole life policy
where you have many more options on how the savings in your policy is
invested. This gives you an opportunity to get better returns
on your savings. Variable life also gives you more options for
investing your money.
Permanent Life Insurance Is NOT The Best Life Insurance
Permanent life insurance is not the best life insurance you can buy. It generally costs you a lot of money for very little insurance, it’s difficult and costly to get at your own money that is saved in the policy and you may even lose the savings when you pass away.
The high fees make the insurance agent and insurance company rich at your expense. This is why many insurance agents tell you that permanent life insurance is the best life insurance you can get – because it makes them a lot of money.
So if permanent life insurance isn’t the best life insurance, what is?
TERM LIFE INSURANCE IS THE BEST LIFE INSURANCE
Term life insurance is the best life insurance you can buy. Term insurance is purchased for a specific period of time and is the cheapest type of life insurance. The most commonly available terms are 1, 5, 10, 15, 20, 25, and 30 years. And unlike permanent insurance, term insurance has no savings associated with the policy.
This is exactly why term insurance is the best life insurance you can buy.
Let me explain…
1. Term Insurance is the Best Life Insurance Because Of Its Low Cost
Since you are paying purely for life insurance (not life insurance and savings), you can generally buy a lot of insurance for relatively little money compared to permanent life insurance. This is a good thing because most people in North America are either under insured, or they don’t have any life insurance at all.
If you don’t have enough life insurance, and you unexpectedly pass away, your family may suffer a lot of financial hardship. With term insurance it’s easier to afford enough coverage to make sure that your family will be ok should something unexpected happen to you.
Give our life insurance calculator a try to get an estimate of how much life insurance you need.
2. Term Life Insurance is the Best Life Insurance Because You Keep Your Investments Separate
With the money you save buying term insurance instead of permanent insurance, you can start your own separate savings or investment plan. By keeping your investments separate from your insurance, you can access your own money without having to borrow it or cancelling your life insurance. You’ll also have full control over how your money is invested instead of being limited to what the insurance company does or offers.
This is called buying term and investing the difference. If you keep investing long enough, you can become self-insured. Being self insured means having enough savings to take care of your family if you pass away. Plus, once you’re self insured, you don’t need life insurance anymore and you can save yourself from having to pay those life insurance premiums for the rest of your life.
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HOW TO GET THE BEST DEAL ON LIFE INSURANCE
Use our life insurance calculator to get an estimate of how much life insurance you need. Then get several quotes to compare from HometownQuotes. (Canadian? Use Kanetix instead)
Fill out one form and will get you several free personalized life insurance quotes. It saves you the hassle of having to shop around yourself to see who is offering the best product at the best price. Go to HometownQuotes now to get your free quotes today. (Canadian? Use Kanetix instead)
PS: Make sure you only buy term life insurance. Anything else and you're wasting your money!
