Most young people don’t have a life insurance policy. Those that do, get some cheap term insurance for some high value and let it ride until they are older and at the urging of a spouse or loved one, they revamp it and change the policy around. If they were properly counseled, they would invest in a smaller amount of long term insurance and when the time is right to revamp their life insurance plan, they have an asset that may already be paid off!
To illustrate, I will use the example of a 24 year old Male and Female, in good health, non smokers:
For $100,000 in whole life Coverage, payable for 20 years the deposits are about $48 per month.
For $100,000 in whole life Coverage, payable for 20 years the deposits are about $40 per month.
This $40 – $50 per month deposits gives you:
- an asset: a whole life policy has cash value and is redeemable
- a product that you won’t outlive
- a product that you make deposits to for 20 years and then it sits quietly until the end
- Deposits that never go up – your rates are guaranteed at the start – why mess with term insurance price adjustments prematurely?
- Peace of mind for your future self – You will always know that you have a good chunk of money sitting around that can go to future kids, a charity or even to bury yourself.
Proper planning over time will ease the financial burden that playing “catch-up” creates. Start early – it is cheaper for you – and helps to build the financial foundation for your future wealth.