Life insurance can be confusing. And, to make matters worse, you may not always have someone you can turn to who’s impartial to help you make informed decisions. You have to remember that life insurance agents, mortgage brokers, and other financial professionals are in the business of making money, and the sales pitches aren’t always the right financial choice for you and your family.
Term life insurance and a fully funded emergency fund can replace the need for many specialty and exotic life insurance policies in most instances. They should be your first choice and the first line of defense against needless, extra life insurance policies.
Here are five types of life insurance that are a waste of money: whole life insurance, accidental death, cancer insurance, burial insurance, and life insurance for a child. The article will also discuss how
Whole Life Insurance
Whole life insurance coverage is permanent insurance that provides coverage for your entire life as long as you continue to make monthly premium payments. A term life insurance policy only runs for a certain number of years, hence the name term. Ten, twenty, and thirty-year term life insurance policies are some of the most popular.
Whole life policies are also significantly more expensive than term because they cover you your entire life. While a term policy for 20 years, for example, can be used to cover you for 20 years, typically during your working lifetime. Term life insurance provides coverage only for when it is needed and then ends after your children are grown, the home mortgage is paid off, and other life events are typically over.
One benefit of whole life insurance is that it has a cash value that grows over time, and you can borrow against the policy. Whole life insurance typically ends up as an investment and is not necessarily a good deal for most people. There are far better investment options for investors than whole life insurance policies.
Accidental Death Insurance
Life insurance pays your heirs if you die. That’s its sole purpose. Accidental death insurance is an additional life insurance policy that pays your loved ones if your death is the result of an accident.
Regular life insurance will pay out whether your death was the result of an accident, illness, or some other manner. Having additional accidental death insurance is redundant and a waste of money.
There is a reason that life insurance companies have gotten creative with the different types of policies that they offer customers. The policies prey on people’s fears, have a low probability to other types of insurance for payouts, and add to the profit margins of the insurance companies more than standard policies.
Most Americans dread cancer. So many are personally affected by cancer or know someone struggling with the disease. It is a real fear, and insurance companies prey on that fear by selling cancer insurance.