Don’t waste money on cash value life insurance. Get a term life policy today:
SUMMARY
In this video, Dave reads an article about universal life insurance and explains why it’s the “the worst of the worst” of financial products. Unlike term and whole life insurance, universal life insurance allows buyers to have flexible premium payments. But eventually, the cost increases and those buyers are faced with an unattractive choice: pay an extremely high premium or collapse the policy altogether.
Here’s how universal life insurance works:
A portion of your premium covers your insurance and a portion builds cash value as an investment. The insurance is based on an annual renewable term, meaning that the cost of your insurance increases as you get older because statistically speaking, your probably of death is higher when you age.
So let’s say you pay a $200 premium at age 35, with $50 of that covering your insurance and $150 going towards your cash value investment. By the time you’re 60, the cost of your insurance might be $250. You’re still only paying a $200 premium, so the extra $50 starts coming out of the savings you’ve been investing for years. Once your savings are gone, the insurance company comes knocking at your door, demanding you either pay a higher premium to cover the increasing cost of insurance or you won’t be covered anymore. Now you’re left with no savings and potentially no insurance.
In this scenario, you could have been paying a fraction of the cost for term life insurance and had separate investments that your life insurance company can never touch. Dave recommends getting 10-12 times your income in term life insurance and
If your insurance policy is building cash value, you’re getting screwed. Get term life insurance today:
RESOURCES
Read more about the different types of life insurance:
Make sure you have enough insurance with the 5 Minute Coverage Checkup:
Life insurance is NOT an investment. Watch Dave explain:
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