If you want to throw your hard-earned money into a hole, then buy permanent life insurance.

While life insurance is a key component of your financial planning, it shouldn’t be an expensive investment vehicle. Your policy should cover enough to replace the lost income if you die, or your spouse dies, so that the remaining person has enough to live on. So for most people, term life insurance will do the trick, and permanent life insurance is just an unnecessary expense.

What is term life insurance?

Term insurance, the most common policy, is cheap, simple and reliable. A policyholder purchases insurance and pays premiums for a set period, typically 10 to 20 years. If the policyholder dies within that period of time, a death benefit is paid to the policy’s beneficiary. When the policy ends, it can usually be renewed for another term. Term insurance is easy to establish, generally inexpensive and a great way to provide for your loved ones in case something unforeseen occurs.

Your needs may change when your children are grown and married with families of their own. As you get older, term insurance allows you to reassess your insurance needs to make sure you’re still getting the best coverage for where you are at that moment.

What is permanent life insurance?

Permanent insurance covers you for life, paying out a death benefit whenever you die, and combines it with a savings component. With permanent insurance, you are effectively engaging an insurance company to manage a money market fund for you. Agents like to tout the investment opportunities and tax benefits of permanent insurance policies, but if the stock market doesn’t perform well, you may end up owing money to keep the policy active.

But the premiums and fees are much more expensive, and there are other ways to invest your money that offer tax benefits. Get term life insurance, which is far less expensive, and invest the difference in a mutual fund. If you have a chunk of change that you want to use responsibly, open a Roth IRA and invest in a total market fund. If you throw money in it every year, you are almost guaranteed to grow a tidy sum for retirement, whether its your own, or for your family.

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