Should I Buy Term Life Insurance Or Whole Life Insurance?
Posted October 12, 2009 – 4:40 pm in: term life insuranceFirst you have to know the difference between the two.
Term Life Insurance only insures a specific period of your life. For example 5, 10, 15, 20 or 30 years. Typically you would purchase term insurance during your income producing years because that is usually when people incur the most debt. I.E. mortgages, kids college expenses, car payments, credit card debt, etc…
Whole Life Insurance covers your life from the day you purchase it for the REST OF YOUR LIFE (as long as you continue to pay the monthly premium). Whole life insurance also generates cash value, which you can borrow against or cash in.
Now which one should you buy? Both types of insurance are designed to protect different things. It is always better and cheaper in the long run to purchase a whole life insurance policy when you are young instead of trying to purchase a term insurance policy when you are old.
Term insurance is always cheaper than whole life when you are comparing rates for the same person. If you own a term insurance policy now, take a look at the policy illustrations for when your policy expires and you will see the type of price increase you would have to pay to continue that coverage.
The biggest advantage to purchasing a whole life policy is that you will not have to prove insurability again when you get older. If you develop a medical condition, it could seriously hamper your ability to purchase a term policy at an affordable rate.
As an insurance agent I see a lot of older folks who are in their 50’s, 60’s and 70’s that struggle to purchase life insurance because the prices are extremely expensive.
My recommendation to everyone is that you purchase a small whole life policy when you are in your younger years and you purchase term insurance to cover your income producing years.
You can visit this website to get life insurance quotes, both term and whole life insurance:
http://affordablelifeinsurance.wfcmarketing.biz
6 Comments
Term is cheaper and all you are really doing is buying the insurance. Whole is more expensive and acts like a savings program, which you could do on your own already.
term
whole life is term with a savings wrapper around it and a lot bigger commission to the salespeople.
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since the insurance companies [see other posts] aren’t terribly good at investing and seem to have high internal costs, their rates of return on the savings component are frequently poor.
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you want a policy that is guaranteed renewable. it doesn’t cost much more and it prevents the company from not renewing you if you later develop a debilitating disease [my second cousin, for example, died of MLS at age 42].
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“level term” is another term policy in a smaller savings wrapper. it should also be avoided and for the same reason.
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“Variable life” and “universal life” are term policies wrapped in an investment program. Usually, any respectable index mutual fund will do a lot better job of investing.
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as inflation continues and if your responsibilities grow, you may want to increase your coverage. what you do then is simply get another policy.
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I recommend only companies whose rating from the Weiss Ratings service is in their first 2 categories. the other ratings services have, imho, poor track records.
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with diligence and ordinary luck, your responsibilities will decline dramatically as you approach retirement age. At that time, you may wish to discontinue carrying insurance and term is the easiest to end — just don’t pay the premiums.
Example: our children are all adults with paying jobs (and children of their own). Since we have sufficient assets to cover our funerals and enough income and assets for the survivor should one of us die, we do not carry life insurance [any more].
i hope this helps.
Term, whole life is a waste.
The best way to put it in terms that anyone can understand is as follows:
Term Life Insurance is like renting an apartment, you have it for a set “term” and then at the end of that term your payment increases. There is no cash value built.
However, Whole Life Insurance is like buying a house. You own the policy & it does build a cash value.
Hope this helps you to make a decision!
No idea. What’s the GOAL? The goal of MY life insurance policy is to get my kids raised. Once they’re gone, my need is gone – so TERM best fits my needs.
And, it’s WAY WAY WAY cheaper than whole life.
Unless you’re doing estate planning, you’re most likely better off with term than whole life – but buy the LONGEST term you can get, and make sure it’s renewable and convertable, guaranteed.
BTID buy term and invest the difference (in cost,whole life is rediculously expensive.) You can invest in a mutual fund and get much higher return than you would in the whole life policy