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Most of the people says that the life insurance has become an important part that one should hold today. What are the peculiarities or importance in holding it?
Replacing your income until your kids are in college (or through college) so that your family isn't destitute in the event you pass away early.
No one needs something other than 30 year term. Anything other than plain vanilla term makes it hard to compare policies and for the vast majority of people you will lose a lot of your premium to comissions if you do any sort of whole life or universal life type policy.
In a 401(k) or IRA fund you are looking for a low expense ratio as the higher the fees the less your investment grows. WL and UL policies can charge upwards of 50% comission plus fees the first year, and 5% commission plus fees for every year after that. So it's silly to think of them as investments as this would be the most expensive fund ever if it was in a 401(k) or IRA.
Most of the people says that the life insurance has become an important part that one should hold today. What are the peculiarities or importance in holding it?
If there are people that rely on you bringing home a paycheck than you need life insurance on yourself, preferably level term. The amount and term depend on your household situation, what would change from a financial standpoint if you died, and also what sorts of goals you are planning/saving for that might be derailed in the event your household lost your earning potential (e.g. spouses' retirement, kid's college, debt, etc.).
Its a general answer, but you asked a very general question.
Most people who say only consider term have not talked to many people who have bought term and found out life doesn't always go as planned. If going with term make sure you understand the conversion options and if it has living benefits.
Most people who say only consider term have not talked to many people who have bought term and found out life doesn't always go as planned. If going with term make sure you understand the conversion options and if it has living benefits.
Term very seldom has living benefits, other than perhaps early payout in the event of a terminal illness. That's why the premiums are so low. If you buy term, you are free to invest the premium difference however you see fit rather than in the limited vehicles the insurance companyoffers, which usually means a better rate of return.
I held whole life policies for 15 years, now all I've got is term. Ten times the benefit for half the premium. No, I don't get anything if I outlive the expiration. But I have 90% of the money I used to spend on premiums available to invest at a much higher rate of return that the cash account attached to my old whole life policies.
Most of the people says that the life insurance has become an important part that one should hold today. What are the peculiarities or importance in holding it?
When you say holding it are you inferring an investment, or or you just strictly talking about acquiring any type of life insurance.
Most people who say only consider term have not talked to many people who have bought term and found out life doesn't always go as planned. If going with term make sure you understand the conversion options and if it has living benefits.
My father in law has stage 4 cancer, he's 59. When he passes (which will likely be in the next few weeks) his term life insurance policies of over a million dollars will go to my mother in law. He's a partner in a law firm and was planning on working until 65. Now she doesn't have to worry about making up that income.
Term life insurance is a gift we give to our loved ones, it has nothing to do with investment returns or living benefits.
I'm not sure what is means by "living benefits." If you want a disability policy, go out and buy one, but there's still no need for a Whole Life policy.
I bought a whole life policy a few years back before I turned 30. I mulled buying into it because my mother has a fairly large trust and I'm positive my family would take care of my wife if something were to happen to me. However, I saw whole life insurance as a investment that had immediate protection and as a diversified investment vehicle (though the returns will not likely be dwarfed compared to securities). In the short-term, I have my regrets because the investment allocation is so bond heavy; my self-directed IRA and discretionary portfolios have doubled over the last 3 years. Long term, it'll take another 8 years for my surrender value to match my investment sum...but the reason I bought the policy was immediate protection and an alternative investment. We'll see how this plays out over the next few decades.
the living benefits of term life are mental for the insured and financial for the beneficiaries.
if you are coming up to the end of the term (or not) you can always buy another term. don't waste money on whole. also, don't think about it any more. its not worth it.
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