Investing in Life Protection or Insurance is a priority over Investing in other investment instruments. The cost of insurance increases as we grow older. thus, the earlier we start, the better. We believe that the amount of insurance depends on two things. The amount of Responsibilities, and the amount of savings and investments that generates passive income you already have. When the size of your Passive Income is already equal to the size of your Responsibility, then, Insurance is no longer a need. Thus, the Insurance Coverage we recommend is equivalent to the Amount of Responsibilities - Amount of Passive Income. But, Insurance can still supplement your Estate Planning needs when time comes that you have to transfer your inheritance to your children or loved ones.
If you are young with not so much responsibilities, then, you do not need that much insurance. The amount of insurance must at least be equal to your responsibilities. Thus, if you are a bread winner, Insurance protection is indeed a priority item in allocating funds.
When you get insurance, go for the non complicated, simple and pure term insurance. This is cheaper and will allow you to manage the difference in cost versus what is commonly called as bundled life insurance with investment. Moreover, buy only a 20 year term insurance for we expect that if you follow what we recommend, you can already build your investment in 20 Years that you won’t even need insurance.
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