Life insurance can be a good idea. If you browse around GoFundMe, you'll find a lot of stories of families dealing with heavy emotional losses while ALSO trying to raise money for funerals, pay their rent, put food on the table, because they don't have money to cover these things. Life insurance can help.
I personally have term life insurance, so if something happens to me in the next few years while we still have kids at home, my husband will have a couple years to get his feet under him, find a job, and support the family.
Term life insurance isn't expensive - think $20-$25 a month for a $250,000 policy. If you die, your family gets the policy amount. It's called "term" because if you do not die during the term, the policy goes away. If you're 30, you might get a 30 year policy, because by the time you turn 60 years old you might be retired and your kids have grown up on their own. They'll be sad if you die, but you'll have enough in savings to pay your final expenses, and they're not depending on you for housing or food.
Whole life insurance sounds good because it pays you no matter what, whenever you die, even if you're 100. But for this to happen it's a LOT more expensive - think 10x more. Insurance salesmen pitch it as an investment. You might pay $250 a month for a $250,000 policy that has a cash value of, say, $80K after 20 years - meaning if you don't want to keep the policy going at age 50, you can say "No thanks, I just want my money back" and walk away with $80,000.
That sounds great, until you do the math on how much a $250 a month investment should really be worth after 20 years - I have a calculator for that. It turns out if you can find a way to get 5% interest, you'll have over $100,000. If you invest in the stock market and average around 7%, you'll have $130,000. These monthly premiums are so high they'd BETTER be worth a lot - that's why they'll give you back $80,000. The problem is that they could be worth more.
That's why a lot of us in finance communities tell people to keep insurance as insurance - low cost, there for catastrophes only, a bit of payment for peace of mind. And keep your investments as investments. Anyone who's trying to combine them is likely to have some financial interest, and if the numbers don't work out, they don't work out. The numbers I used are pure examples, yours might be different. You're welcome to run your own spreadsheet.
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