In America, we insure our homes, vehicles, businesses–some of us even insure our pets. Along with all these types of insurance, we are also all told that we simply cannot be caught “dead” without life insurance. Do you really need life insurance? Is it the best option for you? Only you can make that decision, but there are some things to consider when contemplating the purchase of life insurance.
If you are part of a young family with no other means of support in the event of your death, life insurance may be right for you. Term life insurance typically provides the most coverage for the money but will not build any equity. If you have no other investments or assets that your family can count on, then a term life insurance policy may be your best bet.
If you have a decent investment portfolio and some valuable assets that can be used by your family for support in the event of your death, life insurance may not be the best way to spend your money. Adding to your already existing investment portfolio may be a wiser choice from a financial perspective.
If you are considering the purchase of whole life insurance, or one of the many variations thereof, make sure you do your homework. While this type of insurance does build equity, it often builds it at a considerably slower rate than other investments. While some variations of whole life will provide a bigger return for your investment, there is typically a large risk factor associated with the investment.
Decisions about all insurance, including life insurance, should be made as part of an overall financial plan, not just on the recommendation of a commissioned sales person whose interest is only to make a sale and is not necessarily in your best interest.