Don’t buy term life insurance if you have a lot of money. You simply should not buy any life insurance at all.
Let Us Look At The Young Married Couple
You have married the partner of your dreams and have decided to get married. You have no children yet. You both work. You save every dollar you can save for the baby you plan on having in the future. You should not buy term life insurance because you are positive you wont die before you see your dreams fulfilled.
You are planning to buy a house so that the family can enjoy it. The children, which you plan to have, will be able to run around their own house. You will be able to toss a baseball at your son’s glove in your own backyard. You have all the money to buy this house, so you will need no mortgage. So you have no need to buy any term life insurance.
You are in good health now and you know that 20 years from now you will be there to pay those college expenses. You are going to be there to see your daughter walk up on that podium. May be she will be valedictorian. So don’t buy that extra $150,000 of life insurance that will help pay for her college costs.
Possibly you will have no children. As a couple, you enjoy a truly loving and happy relationship. You know you won’t develop a life threatening illness that may put you six feet under within the next year, so you shouldn’t buy any life insurance at all.
Single Mother With 2 Children To Support
Your husband died, he made some provision for the family, you have readjusted well. You still have a small mortgage on the house, your first born will soon be ready for college, the second will follow in a couple of years. You are quite proud of the job you did with them. Don’t buy that extra $250,000 of term life insurance that would guarantee that both children will finish college. Would you want the balance of the mortgage to be paid off if you should suddenly die.
May be, you have been fortunate with your investments and you have a couple million dollars that will be theirs. Estate taxes have not been repealed as yet. So don’t buy sufficient term life insurance that would cover your estate taxes. Let the children pay it. Leave them penniless.
You and your partners have big plans. You feel pretty certain that these plans will be successfully come to fruition. After all you have all the best talent in your type of business. Each partner specializes in a certain area. The future looks great.
You shouldn’t buy that term life insurance on each partner that would help the company adjust in case of a partners death. You should not buy that life insurance policy that you could use to buy out the deceased partners shares from his heirs. Remember that “buy sell” agreement, may be you have enough funds in the company to fund it. If you do have enough funds I would say do not buy term life insurance or any life insurance at all.
All the smart people that I know of ignore the above advice, and go right ahead and buy the life insurance they need.