What type of life insurance should you buy?
Life insurance was never top priority to me. I figured I was still young and when the time was right I would buy a policy. Then tragically my brother in law died in a car accident. He was thirty years old and left behind his wife and young daughter. The sad part was that we had to pitch in for his funeral costs and his wife and daughter are having a real tough time without the main bread winner.
That was a year ago and immediately I started searching for different types of life insurance and what type of life insurance I should buy. Here are the main types:
Whole life Insurance: Is the type of life insurance that does not expire, you and your family will be protected for the whole life as long as you keep paying the premiums.
Whole life insurance build cash value too, so later in life you can withdraw funds from the policy as long as you pay it back. The amount of the premiums does not go up and once your policy builds face value you can borrow from your policy in life. Whole life insurance is way more expensive than term life insurance. The reason is because the insurance will not expire when you most need and also because your premiums are being invested and you are paying for that investment as well.
Term life insurance: If you are a health young person you can get a $500k term policy for around $55 dollars a month. A $500 thousand whole life insurance policy will cost 4 times more. And that's the biggest difference from term life insurance to whole life insurance. Term life insurance will only insure you for a set number of years. The most common policy is the 30 years. So if you are 28 years old and buy a 30 year policy, when you turn 58 years old, your policy will run out and you will pay a lot of money to renew it or to buy another policy because of your age. Also Term life insurance does not build cash value. In the other hand the price of the policy is very reasonable, so in case something does happened to you while you are insured, your family won't be under protected.
What worked for me and what probably will work for you is to buy a little bit of both. I bought a 150K whole life insurance policy and a 350K Term life insurance. You want to have a balance of the two types of insurance, also consider how much insurance you need. If you are married have children and a mortgage, you want to make sure you buy enough life insurance to put your children through college and to provide them with means to pay the bills and live a good life.
That was a year ago and immediately I started searching for different types of life insurance and what type of life insurance I should buy. Here are the main types:
Whole life Insurance: Is the type of life insurance that does not expire, you and your family will be protected for the whole life as long as you keep paying the premiums.
Whole life insurance build cash value too, so later in life you can withdraw funds from the policy as long as you pay it back. The amount of the premiums does not go up and once your policy builds face value you can borrow from your policy in life. Whole life insurance is way more expensive than term life insurance. The reason is because the insurance will not expire when you most need and also because your premiums are being invested and you are paying for that investment as well.
Term life insurance: If you are a health young person you can get a $500k term policy for around $55 dollars a month. A $500 thousand whole life insurance policy will cost 4 times more. And that's the biggest difference from term life insurance to whole life insurance. Term life insurance will only insure you for a set number of years. The most common policy is the 30 years. So if you are 28 years old and buy a 30 year policy, when you turn 58 years old, your policy will run out and you will pay a lot of money to renew it or to buy another policy because of your age. Also Term life insurance does not build cash value. In the other hand the price of the policy is very reasonable, so in case something does happened to you while you are insured, your family won't be under protected.
What worked for me and what probably will work for you is to buy a little bit of both. I bought a 150K whole life insurance policy and a 350K Term life insurance. You want to have a balance of the two types of insurance, also consider how much insurance you need. If you are married have children and a mortgage, you want to make sure you buy enough life insurance to put your children through college and to provide them with means to pay the bills and live a good life.
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