Common mistakes with life insurance
1. Not knowing what Life Insurance product is right for you!
2. Not Comparing companies and products.
3. Not understanding how the products actually work.
4. Going with the first person you talk to.
5. Thinking that the least expensive quote is the best deal!
Invest in yourself! Not whole life!
My number one belief in Life Insurance is that you need protect the ones you love. Obviously, you can’t protect them form the sadness of your death but you can protect their way of life. The last thing I would I would want is your loved ones life get shattered by having their lives uprooted too. I’m sure you agree or you wouldn’t be reading.
I also think you should have the choice of finding the best prices and companies out there. So get life insurance as inexpensive as you can, get it while you need it and when you don’t you don’t.
So Why Term Life?
Term is the least expensive option out there for life insurance. Let me give you an example of the life insurance I have. I bought a 20 yr policy when my son was born. I feel this will get him through the age of 20, hopefully he will be a great productive person by then. I think he shouldn’t depend on my Income by then. ( In California a discharge from the military gets free State Colleges ) I have college education covered. Also when I bought my home I took out a 30 year term. I buy for needs. And I think you should too.
So Why Not Whole Life? It’s Expensive
So when I first looked into this 20 years ago, I believed it was a great idea. A policy that covers you, for whatever amount you need plus it is a savings account. The both of two worlds. But it was so expensive how could I afford the $100 a month that they were throwing at me. At that time I was just out of college figuring out my life story. I couldn’t afford that so I didn’t get any life insurance that day. I thought there has to be a better option.
That’s when I started reading in to it, books going to the library, looking on this internet thing. I found a lot of information and saw there were different options. Always been pretty good with my money so I liked the option of a lower price insurance.
I was able to save $75 a month a month with going with a term policy. I put that money away in the bank, stock market. It was growing. However I wen’t through some hard time where I had to use that money and almost let my life insurance go. So it was useful. I had my money freed up growing on its own. Not to mention I would have lost the enchilada because there would have been no way I could have paid my life insurance in those rough times. Let’s face it life happens.
What is the average rate of return for the Stock Market since it started?
You might be surprised to know that is has been averaging 7%. This will account for the highs in the 50’s the lows 10 years ago. This is the average since inception.
Warning this will be getting into some math skills, but fortunately I have made it easier for you buy adding a few forms and and some calculators.
So I have added a Whole life policy with a company that I represent. This is for a 35 year old , male great health. You will see that the premiums $3512 a year. I will do a calculation, via Ninja Quoter, for the same 250k and a 35 year old male.
So you can see that there is a big difference in the Amount, But you say “Hey termlifedoneright guy. the other one last your whole life.” I understand, but I just want you to think About what I am saying. Use this money and invest in yourself. I show you what I mean.
$3512 ( yearly whole life premium) minus $260 a year ( term life policy) =$3252. What I did was was used my trusty calculator and put in a 7% return and After 30 years you will have $309k. Now we can go look at what our cash value in the whole life product. As you can see it will be basically 100k. So you will %100 control of the 300k , buy a house buy a business buy a Lamborghini. The world is yours.
I am sure you are saying yourself, but I don’t have the 250k coverage anymore. That is so true. Right now you are a little behind in coverage you just ran out of your term policy and have 309k in cash and would have 350k in total coverage. So lets just make us feel a little better. Lets cover of for another 100k at 65. Say we have had an OK health life, not great some medications. Just normal life stuff and you are not the physical specimen you once were.
GUL : Guaranteed Universal Life ( if you have to have a whole life policy )
So, as you can see, there is a huge difference in the price between life and a policy that’s going to take you to age 100. Let’s compare. $3512 vs 1340…. This is to age 100 that is 2172 cheaper a year. I will put that into my trusty calculator. $278,578.04…. after 30 yrs.
If you absolutely must get something for your whole life the better option is to get a fantastic GUL: Guaranteed Universal life. This product has all the benefits of term life insurance but can last to age 121.