Why should I get life insurance when I could just save money on my own?

A common misconception is that you can start a savings account to accomplish the same goals as a whole life insurance policy. This may sound tempting on the surface, but the savings account does not have the guaranteed payout that whole life policies carry, and that makes all the difference in the world.

If you took the money that you could be paying into premiums and deposited it in a savings account, it would take many years to accumulate the payout value a life insurance policy would have had. And if tragedy should take you within the first decade, our savings will amount to only a small fraction of what you could have left behind. Even if you paid into the savings account and let it draw interest for several decades, you still wouldn't have the value of a life insurance policy which would have paid out after only a short time of premiums.

Life insurance policies allow you to set up trust funds, move the policy outside of your estate, and name multiple beneficiaries with individual payout values. Life insurance policies can also pay to a charity or organization of your choice. You have control over how the policy pays when you are no longer there, where a savings account would be included in the value of the estate and taxed accordingly.

The only advantage of a savings account is that you would have full access to the value of the account at any time. Unfortunately, many types of permanent life insurance accrue value in a similar fashion, and may even yield higher returns over time. As a savings vehicle for your posterity, a whole life insurance policy is probably the best deal you are going to find.