I went with term life insurance because it’s all that I could afford. Considering I had goals of paying my mortgage off early, contributing to my 401k, funding my kids 529 plans and investing in my Roth IRA and regular brokerage accounts, I just didn’t have any money left for a whole life insurance policy.
In fact, even with extra money now available, I still only have a term life insurance plan. You see, I still cannot afford to have a whole life insurance plan or other versions of insurance plans other than term, because of the cheaper cost and benefits that a Term Life Insurance plan provides. For me, a term life insurance plan offers the most bang for my buck, shop around for term life insurance quotes instead of jump on the first insurance company you think of! Of course, I’m investing a large degree of my extra income into investments so that makes it worth it.
I just check 20 year term life insurance rates for a 35 year old that wants to receive $500,000 and the rates are around $65 a month. While more expensive today than when I got my insurance, it’s still relatively cheap.
Other forms of life insurance (whole, universal and variable) include an investment part of the life insurance, but the fees associated with those plans don’t make it worth it unless you are one of the top earners. Since I’m less than the top 10% of income earners, term life insurance is the best deal for me.
To be honest, I actually like that fact that my term life insurance is just plain insurance and not an investment vehicle. I would much rather control my destiny via mutual funds, ETFs or individual stocks than trust my money with some company that sells insurance.
What do you think of the various types of life insurance?
MR
We also have term life insurance. It has always been so much cheaper and less complicated than whole life insurance. I agree with you, I don’t view life insurance as a means to invest. I consider it more like ‘catastrophic insurance’. Cheaper, and only pays out when the worst happens.
Ironically, I read online that 70% of the insurance plans are not term. It’s funny really, you’d think that term would be the most popular type… I’ll have to recheck my sources again, somehow that 70% number is kind of unbelievable…
I agree with you. Whole life insurance is a rip-off. Term life is the best value. “Buy term and invest the difference” is what they say. Companies make money off of whole life while ruining families livelihoods because they capitalize on people’s ignorance. Term offers the best bang for your buck and allows you to put the “difference” toward investments, savings, or your emergency fund.
I have term insurance. I have always figured that for an insurance company to give me a return on an investment, they have to be making more on their investments. Why not cut out the middleman and get my share of the profit? Insurance is to insure and not invest.
Yep, I agree especially at the level of income that I make…
I have term insurance and it works quite well for me. The fact you can pick a term that makes sense for your needs keeps the payment level and can work well. Your only exposure is you will be 55 when the term ends. You may need insurance and you may not pass a medical exam. In other words, this could be a continuing question for the future.
Good point! Coverage in the future could be a problem.
I get term insurance through my job right now because you can’t beat a $100,000 policy for $1.21 a paycheck ($31.46 annually)…
When I do leave this job to work from home, I’ll get another term policy through my husband’s benefits for about $100 a year.
That does sound like a pretty sweet deal!
It’s good to have 2 working spouses to have such options!
I have term also. I think that cash value life insurance is about the least attractive of all tax effective growth vehicles. Buy term and invest the difference, that’s what they say.
Yeah, that’s what I do, and I’m pretty happy with the results so far 🙂
Of course ofter such a huge dip in the market today, I may change my mind (lol)
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