What Type of Life Insurance Is Best?

Most people probably know they need life insurance. What about you? If you’re like a lot of consumers, you may wonder what type will work best for you. At Primerica, we believe term life is the superior type of insurance for the vast majority of people. In fact, we revolutionized the industry many years ago by illustrating how term insurance allows families to get the coverage they need at a price they can afford.

Many personal finance and consumer advocates recommend term insurance for several reasons.

• “For most people, the right type of life insurance can be summed up in a single word, term.”
  SmartMoney.com, “Term or Whole Life?” September 10, 2008
• “Term insurance is a better investment than whole life, as it offers more coverage for your premium.”
  CNN Money.com, “Get A Financial Life In 7 Weeks,” June 10, 2008
• “For the vast majority of people, term insurance is the far better deal. It is cheaper because you are buying only insurance … the fact is that you can typically do a lot better investing on your own, rather than doing it through a life insurance policy.”
  NYTimes.com, “Suze Orman Answers Your Money Questions,” September 19, 2008

Term Costs Less
Financial counselors usually point to a general rule of owning coverage equal to five to 10 times your annual income.¹ Few people can afford the premiums for $500,000 to $1 million in any other type of life insurance except term.

Term Separates Your Insurance from Savings
At Primerica, we then suggest you take the money you save by protecting your family with our term coverage and invest it at regular intervals – such as monthly. We call this our “Buy Term and Invest the Difference” (BTID) philosophy.

If you are investing for the long term, such as for retirement, this approach has been shown over time to be a good way of investing. Consider the following:

• Stock market returns have averaged 11.22% over the past 30 years.^*,2

Think about how much money you could have after investing just $100 a month at the first of each month for 30 years.²

*The average annual rate of return of the Standard and Poor’s 500 from December 31, 1979 until December 31, 2009 was 11.22%.

Term and The Theory of Decreasing Responsibility
BTID fits in perfectly with the Theory of Decreasing Responsibility. According to the theory, your need for life insurance peaks along with your family responsibilities.

• When you are young, you may have young children to support, a new mortgage payment, and many other obligations. Yet you haven’t had the time to accumulate much money. This is the time when the death of a family breadwinner would be devastating and when you need coverage the most.
• When you are older, you usually have fewer dependents and fewer financial responsibilities. Children have grown, the mortgage is paid or reduced, and many routine payments have disappeared. Plus, you’ve had years to accumulate wealth through savings and investments.

Primerica – Term Life Insurance for Main Street People
It is for all these reasons that Primerica believes that term life insurance is the best type of insurance for the vast majority of people. With term, you get affordable coverage your family needs and the ability to control your investments for the future.

1. CNNMoney.com, “Get a financial life in 7 weeks,” June 10, 2008
2. The source for the Standard & Poor’s return is Morningstar. The S&P 500, which is an unmanaged group of securities, is considered to be representative of the stock market in general. Investors cannot invest directly in any index. Past performance is no guarantee of future results. The example is for illustrative purposes only and does not represent an actual investment. The returns do not reflect the past or future performance of any specific investment. All investments involve risk including loss of principal. The figures assume reinvestment of dividends. They do not reflect any fees, expenses or tax consequences, which would lower results. The example assumes reinvestment of all income and does not account for taxes or transaction costs.