As you may ask, what is life insurance for? Life insurance provides financial security for the stated beneficiary when the insured person dies. Well, for most families, the breadwinner would purchase a policy for him/her self with the spouse and the children as the beneficiary. The insurance should replace the current and future income of the breadwinner so that the people left behind would not be devastated to incur financial obligations such as the mortgage payment, day-to-day expenses, college education, retirement, etc.

If you are going to buy life insurance, you should only by term insurance and not whole life insurance. Whole life insurance builds up cash value as well as providing insurance coverage but there are a lot of pitfalls for this for the low to middle income families. I would probably discuss this in my future post. I truly believe that the insurance component should always be separated from the investment portion and people should not treat their insurance as an investment. Life insurance should be a temporary coverage to protect our assets because we don’t have enough savings in hand in case something happens to us.