Why Life Insurance Has to Be Part of Your Wealth-Building Plan

Find out why life insurance isn't a waste of money—it's the leverage you need to gain financial freedom

A right life insurance can not only help your loved ones, but also previde the leverage you need to gain financial freedom. Fizkes/Shutterstock

By Mark J. Kohler

Every day, life insurance companies pay death benefits to the beneficiaries of their policies, providing them with needed and certainly welcome funds. In essence, life insurance provides leverage: You pay a relatively small amount of money to the insurance company in the form of a “premium,” and the insurance company will provide a guaranteed payout of a relatively large amount of money upon the death of the insured.

While there are thousands of different life insurance plans available, they all fall into two categories: term and permanent insurance. Term, as the name implies, provides a benefit for a fixed period of time: 10 years, 20 years, and so on. Permanent insurance is in place for life.

Term Insurance

This is the most efficient way to purchase life insurance. The premiums paid are calculated to accurately represent the risk of your dying based on your age, your health, and other factors.