Why You Should Buy Term Life Insurance
Reader’s Question:
I’m quite confused as to which type of life insurance I should buy. With so many different types of insurance policies to choose from, I just don’t seem to know which one is right for me is. My cousin told me I should purchase term life insurance because it’s pure insurance with protection only with no expensive investment feature. Why wouldn’t I want an investment? Could you explain in more detail why a Term life insurance policy would be best for me?
Billy
Los Angeles CA
Term life insurance is believed to be the “most efficient” way of getting life insurance. I will be comparing whole life insurance and term life insurance to make this clearer to you.
Whole life insurance has three advantages: it covers the policy owner all throughout his or her life, so policy owners do not have to worry about renewing their policies or worry about possible health downturns which may result to an increased insurance rates; there’s cash value so it may be used as retirement investment; and it provides additional security to your beneficiaries.
Now, let’s take a look at these “advantages.” First, if your reason for getting whole life insurance is because you worry about a possible health downturn, then you can choose term life insurance that will provide you coverage until you don’t have any dependents that you need to provide security with.
Second, for the cash value of whole life insurance. The truth about whole life insurance is that although they have return of investment, it is a poor return on investment. Instead of paying more for whole life insurance, (which can be four times higher as compared to term life insurance) you might want to save your money and invest in stocks or other forms of investment which will yield higher return of investment.
Lastly, for additional protection that whole life insurance offers for your beneficiaries. Most people would only get life insurance to leave something for their dependents who are still incapable of providing for themselves. However, there are a lot more ways to secure your family in a lesser price and that’s by purchasing term life insurance.
So your cousin may be right by recommending term life insurance over whole life insurance because it’s much affordable and it will give you coverage for your love ones. Keep in mind that term has no cash accumulation value therefore you need to search for some type of investment apart from insurance.
Category: Reader Questions
