After graduation you will be hounded by insurance agents interested in selling you "whole life" or "universal life" insurance. Assume (realistically) that there is a plan which you pay $500 per month for 20 years, and then you have your ($100, 000 life insurance policy "paid up" for life (you never have to pay any more premiums, but you are guaranteed a $100, 000 payout when you die). You make the first payment right now, and then at the end of each month for a total of 240 payments. You want to compare the value of that plan to buying term insurance which costs you $124 per month for a $100, 000 policy with the rate guaranteed for 20 years (in other words you would pay the $ 124 monthly premium for 20 years, then drop the policy and your coverage would end). The relevant comparison is to look at investing the difference (between the $500 and the $124) and see how long it would take you to accumulate the $100, 000 in an account so you could "self-insure". Assume you can earn 8% (annual) on the invested difference. How long will it take you to accumulate $100, 000? How much will you have accumulated at the end of 20 years? Solve the problem using the "Brute Force Method for finding monthly Future Values" in a spreadsheet.
Should you buy the universal life, or buy the term insurance then self-insure?