How to Buy Life Insurance

Life insurance is easy to buy, and I count it as a necessity for most people. The most important consideration is the type of insurance you buy, and making sure you do not get ripped off.


The world is crawling with agents and companies who want to sell you life insurance. If you are in good health, you can buy a lot of insurance very inexpensively because of the amount of competition out there.

Your first source will probably be the organization you work for. Many times, group insurance is going to have lower premiums than an individual policy. You may also be eligible for a group plan when you would not be eligible by yourself.

Second, you can find an insurance broker who will shop multiple companies to get you the best deal and terms. I personally like Zander Insurance, you can Google for them.


Why do you need life insurance anyway?

The only valid reason for life insurance is to replace your financial contribution to your family. It doesn’t mean you have to have take home pay. It means that if you were to pass away your family wouldn’t have to worry about a major financial impact from your loss, so they can deal with the loss itself. So if you take care of the children, it would be the cash required for daycare, etc. If you bring home an earned income, that’s what we need to replace.

Term insurance is the only valid form of life insurance. Period. You want to have 10-12 times your annual salary for coverage, so that in the event of your death the beneficiary can take the money and put it in an income-generating investment at 8%-12% and draw off the interest without touching the principal. Financially, you’ve been replaced indefinitely.

Whole life, universal life, etc. are all rip-offs. No question about it. They’ve got savings plans, etc. built into them. Anytime your insurance company wants you to invest with them, run away. The returns on these products are lousy because your insurance company is now a middle-man who takes your money and invests it getting 10%-15% returns, and they turn around and give you 4%-8% back. That’s why they push these plans, because they make a lot of money on them. The premiums are enormous compared to the same coverage with term insurance.

Repeat after me. Term life insurance. Term life insurance. Term life insurance.