She Strengthens

Protecting Your Loved Ones: The Importance of Life Insurance

When tragedy strikes, the last thing you want to worry about is how your family will make ends meet. This is exactly what happens in the popular TV series Weeds, where a stay-at-home mother is forced to resort to drastic measures to support her family after her husband’s sudden passing. But what if there was a way to avoid this financial strain?

The Reality of Financial Fallout

Many people don’t think about life insurance until a major life event occurs, such as getting married, having a baby, or buying a home. But the truth is, if you share living expenses with someone, you should consider how they would cope financially if you were no longer around. It’s not a pleasant conversation to have, but it’s a necessary one.

Understanding Your Options

There are two main types of life insurance policies: permanent and term life insurance. Permanent life insurance policies, also known as whole or universal life insurance, offer a savings component, where a portion of your premium is invested for you. This means you can cash out your policy and receive the savings portion when you no longer need it. Term life insurance policies, on the other hand, are obtained for a specific period, usually 10 or 20 years, and have lower monthly premiums, but no investment profit.

Weighing the Pros and Cons

So, which policy is right for you? Let’s consider an example. A 27-year-old female non-smoker with no health issues wants a policy worth $300,000. A permanent life policy would cost $94.30 per month, adding up to $22,632 over 20 years. However, if she cashes out the policy after 20 years, she’ll receive $4,200 back from the savings component. A 20-year term life policy, on the other hand, would cost $21.96 per month, adding up to $5,270 over 20 years, saving her $17,362 compared to the permanent life policy. If she invests the difference in premiums, she could end up with approximately $29,700.

Considering Your Circumstances

When choosing between permanent and term life insurance, consider your health, life circumstances, and ability to save money. Will you need life insurance in 20 years? Do you have the discipline to invest the difference in premiums? Discussing these pros and cons with a financial advisor can help you make an informed decision.

The Bottom Line

The most important thing is to start considering whether obtaining a life insurance policy would benefit your loved ones. Don’t wait until it’s too late – take control of your financial future today.