There was a really funny insurance commercial I remember when I was a kid.  It was about a guy who said something like "What's the point of thinking about something that is depressing to think about, that only comes in handy when I'm gone and that I won't be able to enjoy anyway."  It's an interesting point but of all the things I've discovered the past year about insurance while hunting for it myself insurance can be not only one of the best but also least boring investments you can get.  Here's why...and take notes...because this is NOT your father's insurance.

Basically there are two types of insurance:  Term and Universal.  The differences (in a nutshell) are below.​​

Term Life Insurance:​

  • The Good:  It is cheaper than its kissing cousin universal insurance.​
  • The Bad:  It is temporary, so if you are lucky enough not to die before the term expires all the money you have invested goes to waste.​
  • The Example:  A man in his late 30s who is a non smoker and in reasonable health can buy about one million dollars worth of term life insurance for well under one hundred dollars a month (and well, well less for women doing the same).​  However, once I reached the ripe old age of 67 (or so, terms do very) all that money goes away, unless I am lucky enough to die in which case my family is royally taken care of.​

​Universal Life Insurance:

  • The Good:  It never goes away so can be viewed as a retirement vehicle as well as an insurance policy.​
  • The Bad:  It is much, MUCH more expensive (like four times as much) and it insures much, much less.​
  • The Example:  A man in his late 30s who is a non smoker and in reasonable health can buy about 200,000usd worth of life for around $400.00 per month (again, about half of that for a woman of the same statistics).

The Solution to Life Insurance:​

  • Get'em both.​  If you're lucky enough to be married have both you and your wife pick out one of each.  That is two term life insurance policies and two universal life insurance policies.  Make the term as low as you can stand it (maybe just a million each) as they are cheap and give that little bit of added security.  Load up on the universal life policies (as much as you can afford to) as they can take the place of some or all of a 401K and since they are interest earning (I found one that pays between 5 and 10 percent per year) they make good investments.
  • Are they safe?  Good question and the answer is yes!  There is a law on the books and has been so since the late 1890s that any money an insurance company insures you for must be fully backed in cash in their vaults (accounts these days), unlike the commercial banks which need to have less than 5% in the vault.  So, for example, even a horrible company like AIG, which went bankrupt loosing million if not billions of dollars for its investors actually had a completely solvent insurance department being able to back up any claims made with cash.  Now imagine how a good life insurance company would do.​

Who should we call.