It’s no secret that getting the most for your dollar is important, especially when exploring life insurance options.
With a long and complicated list of different options, It can be truly daunting and difficult to find the best value for you and your family. Unfortunately, because life insurance agents are incentivized by commission to sell you the most expensive policy, you can’t always count on receiving advice with your best interest at heart. Luckily, as a member of BCF Group, client service comes before profits; so I often steer my clients toward the same cost-effective term insurance I protect my family with.
Term insurance is the simplest and most affordable type of life insurance. The premium and death benefit remain the same for the entire policy term. Once the policy term is over, the policy simply ends. Personally, I believe most life insurance needs are finite. As you grow older, life insurance needs likely diminish and at some point may not be necessary at all. Term life insurance can be offered in 10-, 15-, 20-, 25-, and 30-year terms. There is a good chance your life insurance needs can fit within one of those terms.
The more I learn—and explore alternative options—strengthens my affirmation that term is the best solution, at least for my family. A big reason for my thinking is the high cost of alternative options.
Let’s look at a quick case study on a 35-year-old healthy male looking for $500,000 in coverage. A 30-year term policy would cost about $425 per year. In contrast, a $500,000 whole life policy for that same individual would cost about $4,250 per year. Looking at these numbers alone doesn’t tell me much about where my dollars should go. To better assess, I look at the cost difference between whole life and term, which is $3,825 ($4,250 minus $425). What happens if you go with the much cheaper term insurance and invest that difference of $3,825 each year? Assuming an average rate of return of 9% in the market, that $3,825 each year would be worth $568,000 in 30 years! Meanwhile, the cash value in the whole life policy would only be worth about $181,000 after 30 years.
Now it is much easier for me to see where to get the most for my dollar.
This is just my philosophy. For some people, it may make sense to explore alternative life insurance options besides term. However, I caution you to make sure you are getting the most value for your hard-earned dollars. I welcome a conversation, so feel free to reach out.