Do Not Buy Whole Life or Universal Life Insurance

avoid whole and universal life insurance

While there are many ways to invest, one type of investment I think you should stay away from are Whole Life and Universal Life Insurance. Historically, they have performed worse than the market and they do not provide much value after ~20 year period when it is needed the most.

Life Insurance is mainly an insurance policy in case of an untimely early death of a parent to help support the partner and children until they become of age and can survive on their own. Generally, this can be a 20-25 year period from the time your children are born to the time they turn 18 or finish college by 22. So a term life insurance policy for 20 – 25 years should suffice. (of if you have not purchased a policy, it should be until the time that your children get to an age where they can work and survive without your financial support.

For the significant other, if you make it through the 20-25 years of raising children, then investing for the long term will reap a better investment than Whole Life or Universal Life Insurance. Even paying off your house will be better than buying these policies.

A good supporting article on this is by Jonathan Ping from My Money Blog on Equity Indexes Life Insurance.