No one likes talking about life insurance, and no one likes talking to those pushy insurance salespeople that chase you around in the mall. Good question, what will you do when you die? Uh, catch up on sleep. That’s why today, I’m going to break down the truth about life insurance that you need to understand, so make sure you watch this video until the end. First—so we’re on the same page—what the heck is life insurance? Life insurance is insurance on your life. If you unexpectedly die, you don’t want your family to start struggling or go into bankruptcy because they lost an income or they lost their only income. So, life insurance is a way for you to protect your family just in case something bad happens, this way, you know that they’ll okay financially.
But, what you need to understand is that two: Not all life insurance is good life insurance. You have whole life insurance also known as universal life insurance, and then you have term life insurance and these two kinds of life insurance work very, very differently. With whole life insurance, you’re going to pay your life insurance company every single month, and then when you die, whenever you die, your life insurance company is going to pay your family a big check for a million dollars, or whatever amount you decide. With term life insurance, you are buying life insurance for a period of 10 years or 40years or something in between. If you happen to die during the term of your term life insurance policy, your family will get a big check. If you donate within that term, your family gets nothing. So, with whole life insurance, your family is guaranteed to get a big check, but with term life insurance, they’re not. Which makes whole life insurance look a whole lot better at first glance, but you better take a second glance because two: Insurance is meant to be risk protection. When you buy a car, you get insurance just in case you get into an accident. But, if you manage to drive your car around, and you keep your road rage in check—GET OFF THE ROAD GRANDMA—and you don’t get into an accident, that means, you paid insurance on your car for years, but insurance didn’t pay you anything. Insurance is a risk management strategy. It’s just there to protect you just in case something horrible happens. [groan] Life insurance is not meant to be for investment. But Jaspreet, my family is guaranteed to get a check with whole life insurance is not an investment, it’s a risk management strategy. At the time that we recorded this video, if you are a healthy male who’s thirty years old, a term life insurance policy for $1,000,000 can cost you less than one dollar a day. The exact same person, under a $1,000,000whole life insurance policy, might have to pay something around twenty-five dollars a day for the exact same coverage. That means, you could be paying twenty-five to thirty dollars a month with term life insurance, but the same policy could cost you seven hundred fifty to a thousand dollars a month with whole life insurance. There’s a reason why this is so much cheaper than this. When you buy whole life insurance, you are treating your life insurance policy as an investment because you’re paying money to your insurance company each and every month, and then the insurance company will pay back your investment, after you die, to your family. But unlike most investments, with whole life insurance, you don’t get to touch your money or enjoy the profits, the fees are high, and their returns tend to suck. The average return on a whole life insurance policy is something like one and a half per cent year. Ouch. If you want an investment, buy assets, not whole life insurance. If you want to get the most bang for your buck, use life insurance as a risk management strategy, not as an investment. This is why you want to have term life insurance, this way, you can protect your family just in case something bad happens, and term life insurance is so much cheaper than whole life insurance. And five: You need to think about your money. So many insurance people love selling whole life insurance because they get a huge windfall. Remember, you want to buy life insurance so you can protect your family and your wallet, not so you can make your insurance company rich.
And thanks to our sponsor, Policygenius, you can be sure to find the best term life insurance policy at the lowest price. All you have to do is enter in a few pieces of information, which just takes a few seconds, and then Policygenius will show you the same life insurance policies from different companies, this way, you can make sure you’re getting the best price. They don’t charge you any additional fees to use their service, and Policygenius has unbiased experts you can talk to if you have questions about life insurance, and no, they’re not incentivized to upsell you anything. And my favourite part, they show you term life insurance policies before whole life insurance, this way, you don’t get sucked into an expensive policy. If you want to learn more and get a free life insurance quote, I’ll put the links to where you can do that with Policygenius in the description below. Minority Mindset is a partner with Policygenius so if you use them, we will get compensated, but there’s no additional cost to you. So, if you want tolearn more and get a free quote, I put the links to where you can do that in the description. Sixth: How much insurance do you really need? If something bad were to happen, you will always hope that you have more insurance, but that can take you down this rabbit hole of never having enough insurance, and then you can end up paying way more than you need to. So, a simple rule of thumb for life insurance is, you want to have 10 times your annual salary of life insurance as a very minimum, and ideally, something closer to 15 times. And for your term, you want to have a very bare minimum of 10 years in your life insurance policy, ideally, much longer, but 10 years is the very minimum. So, if you make $100,000 a year, you want to have at least a million-dollar policy for a minimum of a 10-year term. Seventh: I hope your money goes to waste. Look, I’m cheap, I hate wasting money. Uh,di-did you just say cheap?
The only time I want my money wasted is with insurance because that means something bad didn’t happen. You have insurance on your car, your house, your investment properties, and hopefully, you’ll never have to use your insurance. But, insurance is a small price you pay today for a big piece of mind, and just like how you don’t want to be caught on YouTube with your pants down, oh, oh, sorry uh-yeah, you don’t want to be caught in a bad situation outside of your control without some sort of risk management system like insurance to protect you and your family.