Term life insurance. Say it again, louder. Term life insurance.
In the life insurance industry, you basically have two choices:
- term: includes only life insurance
- other: includes life insurance and an investment vehicle
Please, don’t be fooled by the claims about universal life insurance, whole life insurance, or any fool hybrid plan. They have (usually hidden) commissions and high fees. They rarely yield a reasonable return—and almost never do if used before they’ve been in force for 20 years.
If you want life insurance, get term life insurance. If you want an investment, find a real one that gives a reasonable return. Mixing the two isn’t likely to give you the best deal.
To help you find the best price on term life insurance, I found a great, free service. Term4Sale will give you a huge list of insurers, based on the criteria you include, and the cost for each one. You decide who is best for you and your family.
Need to figure out how much insurance you need? Term4Sale includes an income replacement calculator to help you figure this out. A non-profit corporation called LIFE (Life and Health Insurance Foundation for Education) also offers a free life insurance calculator.
Protect your family, but do it with money smarts!
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Good tips. I really didn’t know what to look for, just knew I needed insurance.
So the agents that are selling universal and whole life are pretty much scamming us? Any way to get out of a whole life policy? (Don’t ask.)
A lot of policies will include and exclude certain kinds of events, called “perils”. For example War is excluded on almost every policy; which is why on 9/11, when President Bush declared war, he simultaneously voided coverage for all of lower Manhattan. Fire on the other hand is included on almost every insurance policy because fire insurance is historically where property insurance has its roots.
Another thing to be careful of are the policies designed for those aged over 50. They normally offer a choice of free gifts and no medical requirements but can pay out as much as 5 times less than the same policy without the over 50s tag.
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