Term life
insurance
- term versus whole life
what's right for you - term versus whole life?
We have a newly updated
Comparison of Term
Versus Whole Life. Short answer...don't get taken advantage of.
More detail here.
How is term life insurance different from whole and which is the right
selection for you?
That's a key question to answer right away before going any further.
Let's compare the two in layman's terms and see why term offers many
advantages over whole life...the primary one being considerable lower premiums.
"You get what you pay for" doesn't really apply when comparing term life
and whole life.
Or maybe it does.
Whole life is a very different animal in that the carrier will definitely pay
out some amount of money as long as you keep the policy in effect.
There's usually a smaller amount of life insurance benefit from the start
and then you start to build "cash value" as an add-on to the base term life
benefit.
Whole life is very expensive when compared to term life insurance so the
amounts a person is able to afford is typically much less.
You can see the rates right here:
Unless you are willing to pay quite a large amount in premium, purchasing
enough protection can be an issue for most people.
As we addressed in our article on how
much life insurance coverage to purchase, the financial responsibilities and
income replacement needed for most families would be hard to address with a
whole life policy unless you are willing to pay a significant amount in premium.
The reason for this cost is that whole insurance doesn't really fit the
model of insurance.
Insurance, by definition, is a device to spread the improbable risk that
might wipe one individual and spread among a larger number of people.
When done correctly, each person pays a premium to offset the total risk
for the group.
Whole life is not this.
With whole life, every member of the risk group will trigger their benefits,
albeit at different times.
The carrier basically needs to invest the premium amount and make enough
money for a long enough average period to pay out the benefit to everyone and
make a profit.
This structure is probably more akin to a mutual fund with some added life
benefit up front in case.
It's hard to make an argument for this.
A better approach is to buy a much larger term life benefit at a fraction of
whole life cost and invest the difference if you like.
That's essentially what the whole life carrier is doing but with an added
margin at your expense.
It's hard to see how whole life benefits anyone besides the brokers and
carrier when you analyze the dollars over the long term.
Term life insurance is true insurance.
At it's core, you are protecting against the risk of death for a fixed period
of time and for a fixed amount.
We address the concerns to look at when choosing your
term length period of time but the key is to address the years that
financial responsibility falls hardest and "replace lost income" during that
period and/or address financial/debt liabilities such as mortgages, loans,
credit cards, etc.
This method is significantly less expensive than that of whole life
insurance.
We can help you walk through both options for your needs.
Either run a
life quote, talk to an expert at 800-710-0455, or
email us!
Again, there is absolutely no cost to you for our services. Call
800-710-0455 Today!