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In this article we will be going over a Whole Life Insurance policy and dissecting it so you can fully understand if you have this type of policy.
According to the article The ABCs of Making Wealth by Denis Cauvier life insurance should be purchased for protection and its not an investment. Many people purchase whole life insurance as an investment and in their opinion, “its one of the greatest Wealth Robbers”. Goal is obtain the maximum life protect (Term insurance) at lowest price, while investing money as much money per month in best investment vehicles (Real Estate, Roth IRA, IRA, Mutual Funds)
Draw Backs to whole life:
How much life insurance do i need?
To find out how much you need we use DIME which is a simple equation which sums up Debt, Income, Mortgage, and Expenses. For example:
Grand total of coverage needed = $495K
How Whole life insurance works:
It’s a financial safety net for your family in the event of the loss of a bread winners earnings in the event of death. Its permanent life insurance that is in force throughout your life when you pay premiums to secure the death benefit your family receives when you die.
This policy does have a combination of Cash Value and life insurance can offer dividends (not guaranteed). The Cash Value can be used to pay off your premiums.