Term may be appropriate for a young breadwinner in their 20’s with a spouse and baby, but if you have any sort of assets, permanent is the way to go.
With term insurance, once the term is over, you do not have any insurance and your health and therefore your cost of insurance may not determinable. Worse yet, you may be uninsurable. With perm. insurance you can build up cash value and pass on assets to your spouse tax free and you can get your policy guaranteed for life.
The reason why so many people buy term, is because it is an easy sell. The salesman sell the death benefit. There are so many great things that you can do in regards to structuring your business and estate so that your beneficiaries will retain maximum value after you pass on with G UL.
Also these “buy term and invest the difference” folks would suggest that you take the difference between the premium that you would have paid in whole life insurance and what you are actually paying for your term insurance premium, and invest it? Too bad it doesn’t work!
That is like giving a 17-year-old $20 and saying, “I trust that you’ll spend this on a healthy dinner while out with your friends.” Instead, you know he’s going to spend it on greasy burgers, fries and ice cream. Keep it real.
If for no other reason than the fact that Americans are horrible at saving money, “buy term and invest the difference” should be banned from our vocabularies.
In my experience, people who say they will “buy term and invest the difference” (BTID) rarely actually do so. Instead, they buy term and spend the difference. The truth is, people don’t always understand the savings element of the BTID idea. Initially, they may have had the thought of investing the difference, but typically, life gets in the way. This is where the BTID idea usually fails, leaving the client with no insurance and no investments.
Questions or need a quick quote?
Call Mintco Financial Team of Independent Advisors:
New York 716-565-1300