Life insurance is an issue that may pose a real challenge and make you wonder what to choose: a permanent policy or a term one. And here you find yourself guessing, which means I won’t be throwing my money away.
Permanent life insurance presupposes that a part of your premiums will be invested and some can be withdrawn tax-free for your children’s college, your retirement needs and so on. Good for you! Also, your heirs may get a huge death benefit after you leave this world.
However, is it really as good as it seems? Someone would say that the only one who will receive profit from a permanent life insurance is a salesperson, who will receive a fat commission after persuading you to make the policy life-long.
Let’s weigh up some pros and cons, and try to find out who really needs life insurance and why.
Question #1. How much do you actually need?
It’s always a bad idea to spend more than you can afford and, definitely, more than you need. The whole point of life insurance is to be assured your family will receive enough financial support if you pass away.
The trick is, in buying life insurance you risk spending more than your family will ever get. It’s a matter worth thinking about. You should always remember that insurance companies collect particular sums in premiums, not only to pay off your benefits, but to cover their expenses and to make profit out of it.
Question #2. How long will you need it?
You know that permanent life insurance will cost you much more than a termed one. That’s a given, because permanent insurance will cover you through your whole life. However, many people don’t need any life insurance after the retirement. They may not have children or any other dependents, or their family may have enough income to live happily without this insurance.