Buy The Least Expensive Term Life Insurance Policy
“There are worse things in life than death. Have you ever spent an evening with an insurance salesman?” — Woody Allen
I don’t know about you, but I have spent an evening with a life insurance salesman, and I have to agree with Woody. The salesman pitched me a bewildering number of choices to part me from my hard earned money, and talked and talked. That was several years before I became a life insurance agent and learned the tricks of the trade, before I knew the strategy of only buying the least expensive term life insurance policy from a company rated “A” or better.
There are numerous variations of life insurance policies, but they all fall into two basic categories: term life insurance and cash value life insurance. Cash value life insurance comes in several flavors: whole life, universal life, variable life, and variable universal life.
While cash value policies can be used to achieve multiple goals in your financial plan, the problem is that they don’t do it well. And one could achieve similar goals more effectively and profitably with better investments. That’s because cash value life insurance is not a good investment vehicle, and it should never be considered as an investment. For that reason, the best value is a term life policy. It’s pure protection at a reasonable price.
Choosing a term life insurance policy is simple. Once you decide on the death benefit amount that you need, and the length of time that you want coverage, choose the policy with the lowest premium from a company that is rated “A” or better. The ratings are given by insurance-rating companies, and are meant to give you some idea of the financial soundness of the insurance company you are considering. A rating of “A” or better is an indication that the insurance company is financially strong.