Term VS Whole Life Insurance

A lot of people ask the question, which is better, Term VS Whole Life Insurance. The answer is simple in almost every case. Term is better. That doesn’t mean that whole life insurance doesn’t have it’s purpose, it just doesn’t make sense for most people.

First Ask Yourself Why You Are Buying Life Insurance?

In most cases life insurance is used to provide an income for the loved ones left behind if you were to die prematurely. We will talk about other reasons briefly in summary below, but that is the biggest reason to purchase life insurance. With that being said, you usually want to buy as much coverage as you can afford at the cheapest price possible. This is why term life insurance becomes the best option. Term life insurance provides most healthy individuals the opportunity to get $250,000 and even more coverage for $20-30/month! The same amount of whole life insurance coverage would cost $100 or more per month. That’s a huge price difference.

Here’s Something To Consider

There is one thing that I tell my client’s. If you die today, your spouse isn’t going to ask what type of coverage you have, just how much coverage did you have and when they can get the check. Why? Because they need to money to survive and take care of bills. If your income wasn’t important, then you probably wouldn’t work.

Another reason that I like Term insurance is the fact that it covers exactly what it’s supposed to. A death benefit if you die. Whole life insurance is often sold as a retirement investment. You pay a portion of the monthly payment toward the life insurance and then a huge chunk towards the investment side. I would maybe feel positively about whole life insurance if the investment part actually performed well, but there are plenty of other ways to invest that usually offer a much higher return on investment. Talk to you investment representative for more information on that, but that’s how were going to leave it.

So When Is Whole Life A Good Choice?

In my opinion, whole life insurance is an excellent option for estate planning. You can use whole life insurance to pay off estate taxes and other expenses such as that. Whole life is also a decent option for the families that have chosen to start a family in the 40′s and 50′s. Those individuals may be better off locking in a permanent life insurance policy and setting the rate while they can.

There are many other things to consider when choosing your life insurance plan and which one is best for you. The most important thing to consider is how much coverage you need and what you can afford. 9 times out of 10 the budget that families have to put aside for life insurance leads toward term life insurance. That’s why we feel so strongly about using that type of insurance to protect your family.