Mama to 6~The Large Family Logistics

Life Insurance

Untitled Comment

10:45, Wednesday, July 16, 2008 .. Posted by morningsunshine

the theory of term is that you buy insurance while you cannot self-insure. while you still have young children in the house. So you are 25, buy 30 year term so that your family is protected while you are in your income-earning years. chances are you will never see that money again (and that is a good thing, really, because it means you are there to raise and care for your family.) but if you do get a return on that money, your family has a means of living without you.
the theory is that you have meanwhile, during those 30 years, also been putting away some money into a savings account, money market, IRA, piggy-bank-under-your-mattress, so that when your term life expires, you are basically self-insured. If you die at 56, your family has the savings you put away, and chances are your children are mostly grown.
Whole life gives very poor returns for the money. what I have heard suggested is to look at two policies - term and whole-life. get them as close to the same pay-out for death. then look at the difference. Say you want 100,000 payout (easy number for an example because of the hundred). the term is costing you $25/month; whole-life is $100. buy the term and put $75 a month in a special long-term savings OF YOUR CHOICE. my understanding is that after those 30 years, you will have more money accessible than if you had bought the whole life.
I am not a financial expert, but this is my understanding from when we were looking at this stuff. insurance companies make a HEAP of $$ from whole-life. not so much from term. guess which they would rather sell you?

Life Insurance

12:43, Wednesday, July 16, 2008 .. Posted by ahall003

Dear MorningSunshine,
Thank you so much for your input!! Is this what you do?
Anne