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What is Buy Term Invest the Rest?
Buy Term Invest the Rest is a strategy that provides an alternative to whole life insurance policies. The rationale for such a strategy is that one can invest the savings in premiums one receives by purchasing an inexpensive term policy rather than a pricier whole life policy. The accumulated savings and investment returns will then make up a sum of money for one’s insurance needs in future when the term policy ceases.
Here’s the Math for such a strategy:
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Diversify Your Insurance Portfolio
Insurance is a tool people use to transfer financial risks to an insurance company. Someone who purchases insurance to reduce his financial risks should logically then go one more step to further reduce the chance of an unlikely event causing him financial troubles.
Thus, it is worth diversifying one’s insurance portfolio where practical. Placing insurance policies with different insurers ensure that a person’s entire financial portfolio is not in jeopardy should one insurer collapses. While there are regulatory measures in place to protect policyowners in such an event, they are still under tweaking and remain untested. It is still prudent that one takes necessary caution not to put all of his insurance policies with a single insurer.