Life insurance is very important for any adult. If you’re a breadwinner, you’ll want to ensure that your family will be ok if anything happens to you. A stay at home spouse should also have life insurance. Childcare and homecare are expensive. You’ll want to be sure that your family can afford these expenses if something happened to you. The real question is whether you should invest in term or whole life insurance.
As the name implies, term life insurance means your beneficiary will receive money if you die within the term. Your monthly payments are based upon several factors such as you gender, health, age, vocation. Generally, term life is pretty cheap. A normal 30-year-old can get a $1 million 20-year term life policy for around $700 a year.
Whole life consists of a life insurance policy and an investing fund. The idea here is that your policy has cash value regardless of whether or not you die. As you might expect, whole life is much more expensive because of this investment feature.
Which one is Better
Both whole and term life provide for your family if you die. But how does the whole life investment plan stack up against other investments? Let’s say the 30-year-old above bought a 20-year term life policy for $700 a year, and then took the remaining $7,530 they would have paid annually for a whole life policy and instead invested it into an S&P 500 Index Fund using a 401k. Based on the S&P 500’s 30-year average, this 30-year old would have $536,626 after 20 years. That’s substantially more than what the whole life policy would provide.
It can be nearly impossible to invest if you’re dealing with unmanageable debt. Bankruptcy can be a great way to shake off your debt so you can start investing for your future. Please contact our office if you’re looking for a Fairfield bankruptcy attorney.
Categorized in: Assets