buy term

Buy Term and Invest the difference

Term insurance or permanent insurance? Many people struggle over which type of life insurance makes sense for their situation. The difference between the two comes down to cost. Some experts will question why should you pay for an expensive permanent policy when you could buy term, which is way more affordable. With the savings, you could invest in a mutual fund, annuity, stocks, bonds, or other investment vehicles. The idea is that investing that “difference” (or premium savings) would replace or exceed the cash value accumulation of the permanent insurance.

If you decide this strategy is right for you, you need to consider what best suits YOUR objectives and circumstances seriously. Think about this:

  • You may not have the discipline to invest the difference.
  • Suppose you need to renew or reapply for your term policy. In that case, the cost may become prohibitive as you get older or develop health problems.
  • If health problems occur, you could become uninsurable and not be able to purchase additional term insurance at a future date.
  • The difference between your term insurance premium and the premium for your permanent insurance can be substantial. To invest the difference and make it worth your while, you must consistently invest over time.  
  • The investment you choose may not perform as you hoped.

Be sure to review the benefits, risks, product features, and any current or future charges associated with any insurance and investment product. When in doubt, schedule time with a professional because they can help you sort through all your options and ultimately make the decision that will be in your best interest.


The #BuildWealth Movement® works tirelessly to help people Disrupt Generational Poverty® for their families and community.

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