Life Insurance Is Better

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Stethoscope on a medical report

Why Whole Life Insurance Is Better Than Term Life Insurance Are you trying to decide between whole life insurance and term life? Understanding the differences between term life vs whole life is a great first step in the life insurance buying process. Choosing the wrong policy can be a potential disaster. Let’s learn how to avoid that.

In this post, we will go over the top reasons Whole Life insurance might be a better purchase compared to term life.  

Is Whole Life Insurance Better Than Term? 

There are several reasons why whole life might be a better option for your coverage goals.

You should consider your age and whether or not term life is a good choice.  Term life insurance runs for a certain period of time and then the life insurance policy ends.  If you are young, you will have to start a new policy which could cost you more once your original policy ends.  Another reason Private Whole Life insurance can be better is the overall cash value of the policy.  Although Level Term Life Insurance is frequently the best choice, this post will provide examples that might have you re-thinking and choose Whole Life instead.

Is Term Life Better Than Whole Life Insurance?

Term Life Insurance is usually more affordable, especially when you are young and looking for a policy for the first time.  Term Life is a great choice if you want to protect your family and loved ones should you pass away early on.  It’s also a great deal less expensive if you want to ensure your mortgage is paid off and your children will be protected.  You can get a cheap term life insurance policy quickly and easily. A 15 or 20-year term life policy is very affordable and will give you the protection you are looking for.

Life Insurance Requirements Change The Older You Get

In general, the older you get, your insurance requirements will decrease.  For example, your children will grow up and take off on their own.  Your mortgage has been paid off. You will retire and therefore the need for replacing your income will drop significantly.  So, at some point, you will want a policy that is not as demanding. 

Many financial advisors believe getting a term life policy is more affordable and will provide the coverage you need.  If you have a 30-year term life policy after it ends you and your spouse will probably have retirement investments to live on and your children have grown up.

School Of Thought: Buy Term And Invest The Rest

Why spend more on life insurance that at some point will end when you could take that extra money and invest it in your future once the plan is over?  In theory, you and your family would be better off with a term life policy and invest the savings you’d get between term life and whole life.  Your investment will net more returns than throwing that money into a whole life policy.  This philosophy can be used in many situations.  

Some Examples:

  • Why eat out at a restaurant when you can eat at home and use that extra money to invest.
  • Stay away from the movie theatre and wait for them to come out on Netflix or get them through your cable provider with their Paid To View option.
  • Take a bus or ride a bike instead of paying for fuel.

Unfortunately, most people do not have the discipline to take the extra money and invest it over the next 30 years.  Chances are, you will find something else to spend the money on.  

If you are one of the disciplined ones – Bravo!

That said, before jumping on the Term Life Insurance train, you should consider the advantages of getting Whole Life Insurance instead.

Is Whole Life Insurance A Better Investment?

There’s no doubt that over 90% of insurance policies sold at Life Insurance Blog are term life policies because they are the best option for most people.  But the fact is, there is still a 10% ratio that is not convinced that Term Life is the best choice.  Even though many established insurance companies and TV personalities advise people to go with term life instead of whole life, there are those that disagree.

We will go over reasons why whole life might just be the better option for you:

Consumer Tip:  Agents will earn higher commissions on a cash value  policy than on a term life policy.  Therefore, when trying to decide which policy will work best for your needs, there are some questions you should ask yourself.

  • Am I being pushed into buying a policy I don’t need and does whole life make sense for me at this time?
  • What are the odds that I will need until I am 100 years old?

On the other hand, whole life might give you some incredible savings.  We’d suggest you Google and search the infinite banking concept that will give you something to think about!

If you are considering a cash value life insurance policy, you need to know if it will be your best option for the kind of coverage you are looking for.  Take some of these reasons into consideration:

Do You Want Coverage That Lasts Your Entire Life?

The difference in cost between whole life and term life is actually small.  Yes, you will pay a little more for whole life but it’s really not that much.

With whole life, you can use your policy as if it is your own personal bank.  Whole life covers you over your entire life and offers some excellent features that make it a high selling point.  Along with lifetime coverage, a portion of your life insurance payments go into a cash value account that grows over time and is tax-deferred.

The cash value grows very slowly at first and then picks up speed later on.  Some policies grow faster than others which is why you should sit down with your insurance agent to see the differences.  The bottom line, this is a major reason why whole life insurance premiums are higher than term life.

Many people choose to use their cash value to pay off their premiums but if you choose to take the cash value, you have to continue paying your premium to keep your policy going.You can also opt not to pay it back but if you choose this option, the interest and the money you owe will come out of your death benefits when you pass away.

If you need a loan, for some reason or another, you will have to pay it back with interest but the rate is usually lower than a loan from your bank.  You can also opt not to pay it back but if you choose this option, the interest and the money you owe will come out of your death benefits when you pass away.  This option is something you should take into consideration because your beneficiaries could end up with a great deal less depending on the amount you withdrew.

Bottom Line

 what might work best for you.  Knowing exactly what policy is right for you, we would have to know exactly what you are trying to get out of a life insurance policy and learn more about you.  Either sit down with your insurance agent or give us a call!  We’d be happy to find out what we can do for you!

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