Buy Term Insurance Instead of Life Insurance

It is common for people to buy life insurance from their insurance company. However, there may be a better option. In this video, you will learn why term insurance is often a better option.

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In this episode of the Ramsey Show, Dave talks about life insurance compared to term insurance. He says that life insurance is one of the worst policies out there. In fact, whole life insurance costs 20 times more than term insurance on average. This is because a good chunk of the life insurance money goes towards a savings account inside the policy. This may not sound like a bad thing at first. However, this cash value only earns 1 to 1.5% each year. This is a very poor return. If you had put this money in a mutual fund, you would be making around 5-10% return per year. Therefore, it is better to buy term life insurance and then put the rest in a mutual fund where it will earn more return. However, each person has unique needs. There may still be some cases where life insurance is a better fit.


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