Mar 20

In my opinion there is only one kind of life insurance that makes sense for the vast majority of us, and that is term life insurance. When you sign up for term insurance, you’re buying ei just-in-case policy for a finite length of time that you need protection. These policies are not very expensive, because the insurance company knows you have relatively little chance of dying while the policy is in force. Most likely they won’t have to pay a death benefit, and the premium is accordingly relatively small.
With a whole life or universal policy, on the other hand, the insurance company knows it will almost certainly have to pay the face amount or the death benefit. You’re expected to die with it. So they price it accordingly. It’s true that whole life and universal policies have cash values, so if you decide not to keep it, or if you suddenly need money while you’re alive, one source would be the cash value of these policies. But commissions on life insurance policies are some of the most lucrative commission’s in any business—and you’re paying them. If your goal in buying life insurance is to put money aside, there are far, far better ways to save it without having to pay these kinds of commissions.. With low-cost term insurance, even though you do not accumulate a cash value, you’re paying low commissions on the protection you need, for as long as you signed up for.