Which Life Insurance Is Best For You?

This post may contain affiliate links. Please read my disclosure for more information.

Shopping for life insurance may look complicated but it really isn’t. Ask yourself these two questions: Why do I need one? What can I afford?. Most people get life assurance to avoid the financial burden once they pass away and provide a tax-free lump sum that the beneficiary(ies) can use for future needs. 

I come from a culture where life insurance is considered taboo for the simple belief one should enjoy his/her hard earned money while still on earth. I certainly agree but it would’ve been selfish on our part to continue this analogy and generation wealth gap if after all I leave my loved ones financially stranded when I could’ve done the minimum while still on earth.

SHOULD YOU GO WITH TERM OR WHOLE LIFE INSURANCE?

No matter your choice they both will take you to the same goal. Let’s get into their differences to help you determine which is best for your family. 

Term life insurance

Is exactly as stated, you select the coverage amount for a fixed period of time. Term premium payments are less costly. You make your regular scheduled payments until the time frame on the policy comes to an end.  Now, if you die during the term, your beneficiary will receive the death benefit. If you don’t and the coverage ends then no one receives any money.

Whole life insurance

Works exactly the same as term life, the insurer will pay the death benefit regardless of when you die. But the feature can be a little more complex and cost more than term. This policy includes an investment component known as a cash value as you pay your premium you may be receiving dividends in a tax-deferred account.

You have the benefit of borrowing money against the policy for cash if ever needed. To avoid reducing your death benefit you will need to repay the policy loans with interest. Another benefit of the whole life is that you never have to worry about your premium increasing. The premium remains the same until you finish paying for the policy. Best way to look at it is to start early, set it and forget it. The longer you wait the higher the premium gets.

OTHER REASONS YOU SHOULD CONSIDER HAVING LIFE INSURANCE?

College expenses

Retirement support

Outstanding loans

Childcare expenses

Daily living expenses

CAN YOU HAVE MORE THAN ONE LIFE INSURANCE POLICY AT THE SAME TIME?

Quick answer is Yes. It all comes down to what you can afford. If you’re not at a stable job I would not suggest Whole life because the premium will be slightly more than term life.

There are no laws preventing you from having multiple policies. As a matter of fact, it is a popular practice amongst policyholders especially when you experience major life changes such as starting a business and buying a house. Remember, the main purpose of life insurance is to protect your finances.

You may already be paying for life insurance provided by your employer that is called Group life insurance. These policies do not provide enough flexibility if even compared to term life insurance.

In addition to the wife’s term life policy and my whole life policy we also participate in our employer-provided group life insurance to the minimum.

BEST LIFE INSURANCE COMPANIES OF 2021 ACCORDING TO U.S.NEWS

Northwestern Mutual

Haven Life

State Farm

Banner Life

Principal

Pacific Life

Guardian Life

Nationwide

Primerica

MassMutual

New York Life

Allstate

John Hancock

Protective

Mutual of Omaha

Prudential

BOTTOM LINE

Avoid leaving all the burden to your loved ones when you die is the goal. Don’t wait until you have a precondition to make the financial decision as the premium gets higher the longer you wait. For some, the term life insurance is best since it’s more affordable with the only caveat once you reach the final term payment, you and the insurer go your separate ways. Unlike whole life insurance a payment to your beloved is guaranteed.

If you want to get some more information about all of the different kinds of life insurance, visit this Investopedia page.

**Valuable Resources I Use Daily:

Empower offers a free account to assist you in managing your net worth and investment portfolio. Your asset allocation and portfolio performance are so obvious and easy to grasp that I can't get enough of them. It's an excellent tool for anyone keeping track of their investments.

Robinhood is a platform that does not charge commissions. You can start investing with as little as $1 in stocks, ETFs, and REITs. It's simple to operate and navigate. Sign up now to receive a free stock.