Term Vs. Whole Life Insurance (Life Insurance Explained 101)

So today we’re going to break down Whole Life insurance vs Term insurance. And you know everything that happened in 2020, a lot of people that didn’t even think about it are definitely thinking about it now. ????ACORN FREE $5???? Link: https://acorns.com/invite/38EYSU

1. Term Insurance
– Is exactly what it sounds like
– You get insurance for a specific term 10-30 years usually
– If some happen in those 10-30 years your family will get a payout
– But you do have to consider one thing, a lot can happen in 30 years

For example:
– Say you buy a policy and its term insurance 30 years ( right now that would cost me $50 dollars a month for 30 years, a total cost of around 18k
– Now here is the worst that can happen, in less than 5 years I get married to have a kid, and while on my way to start bucks to get my 3-year-old some coffee, a bad skittle falls on my head, I’m sorry I didn’t make it. My wife gets a million dollars, enough to last her 20 years or so.

What Happens After 30 years:
– In 30 years I will be around 53 years old, by that point, all of my kids have gone to college, came out, and started a family ( if they don’t get addicted to skittles and coffee )
– My wife and I have a paid-off house, investment money, and also Cash
– So if 30 years go by, its more than enough time to make sure that I get all of my affairs in order.

Ps: payouts are not taxable, so don’t worry about that.

2. Whole Life Insurance:
– Is for your entire life, as long as you keep paying the premiums
– It also has a cash value to it, that grows in interest over time tax-free
– And that way if anything happens to you, your family is okay ( that’s what the agent says)

But the truth is:
– Although the premiums stay the same for life, it’s like 10x more expensive than term insurance ( would cost me around $600 a month)
– The Cash the Value you’ll have although its cool and you can borrow against it and it grows over time and even pays a dividend. ( most likely as you get older, you’ll use it to pay the policy because your income is going to change )
– Although it’s for life: if you really go longer than 30 years, you’re kids are adults by that point, your wife has a retirement fund. ( everything should be set in order, no one should need your money honestly)

Here is something else you don’t know:
– I actually went to get one of these jobs once and it was selling life insurance
– The commissions work like this, usually would make around 80-100% of the personal policy premiums for the first year
– And then you would continue to get paid 15-25% their after ( so if you get enough policies, potentially you could retire very easily)

And that’s why: although some agents are great, you don’t want to trust them, they have to much to gain.

Website: https://www.policygenius.com/

3. What should you do
– Obviously, term insurance is going to best idea 9 out 10 times
– It’s cheaper and gives you enough time to get your house in order
– However, if you really want whole life insurance for the cash value, and the life long policy, and all the other sales stuff ( then do it yourself)
Here is what I mean:
– If a term insurance policy is going to cost me $50 bucks and the whole life one $688 bucks
– Well why I don’t just take the difference and invest it in my retirement fund, grows tax-free also, also pays a dividend and I have more control
– If I invest $638 bucks per month into safe low-risk index funds for 30 years – at an 8% return I would have a total of $936,679 bucks ( pays you $18k in dividends annually )

But it’s risky: obviously, as you get older, you’ll start to invest more into bonds that are less risky, than even those insurance companies.

Overall: I’m getting term insurance and doing my investing.

Ps. If you kept investing for 50 years it would be 4.7M

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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