Perhaps one of the best ways of understanding life insurance is by dividing it into the two major ways that you can obtain it. The first we will call “renting” and the second we will call “owning”.
Of course, no one in the insurance industry speaks so simply. They come up with nebulous phrases like “level term” and “flexible adjustable” and other jargon that makes little sense to normal humans.
But I didn’t come from the insurance industry, I came from the roofing job site. So, if I can explain these things in a way that I would understand them as a roofer, you will understand them as a consumer.
Remember back to your days in college. You probably rented that bachelor apartment for super cheap and shopped for Ramen noodles while you divided utility costs amongst your three other roommates. Why on earth did you not buy a house? Most likely, it’s because you weren’t going to be there for very long and therefore would not have had a chance to build up equity in the home.
And just as logically as you rented during your college years, you decided to own later on in life. It’s very similar in the world of insurance. There are appropriate times to rent term insurance, and there are other times that owning insurance is more advantageous. It all depends on the context of your life and where you are with respect to your financial goals.
So, don’t let any overzealous salesman badger you that this product is empirically better than that product. And don’t let any self-proclaimed financial guru tell you that you’re stupid if don’t do exactly as they say. Work with your advisor to see what type of insurance best serves your plan. Then go get it.