Whole Life Insurance

Whole Life Insurance!

Permanent life insurance (also called whole life insurance) is exactly what its name implies, insurance that covers your whole life. Term life insurance as you recall only provides protection (death benefit) for a stated period of time. See your online whole life insurance quote here. Another product that might interest you that is also a permanent type of policy is a universal life insurance policy.

Whole life vs Term life which is better?
Unfortunately, this is an arbitrary question because it solely depends on your situation, needs and goals. So the answer could be Yes or no or sometimes neither. Why? You know the saying “two heads are better than one?” With life insurance, often times the best solution is a combination of both as many people need both temporary (term insurance) and long term (permanent insurance) to fulfill the family’s needs and goals. There are distinct differences between the two that may help guide you in the direction you need to choose the best life insurance policy when your actually ready to buy life insurance.

Whole life insurance offers two major life insurance benefits term life insurance policies cannot.

  • 1) Permanent life insurance provides Continuous lifetime coverage for a fixed/level premium (as long as the premiums are paid on time) while the coverage for term life ceases when the term ends and premiums generally increase at each renewal often making it too expensive to keep. 

  • 2) Whole life insurance can be an investment vehicle by accumulating guaranteed cash value which is tax-deferred while providing you lifetime coverage. Cash values can allow the policy owner to borrow against the policy value or withdraw all or a portion of the cash value through policy loans. Cash value can be accessed for emergencies or other financial needs and may be eligible for dividends. This makes a whole life insurance policy a good choice for individuals with long range financial goals. Examples of Permanent insurance needs are: using life insurance to provide future income for loved ones, pay final expenses and estate taxes or to donate money to a charity. Universal life insurance and variable life insurance are examples of whole life policy. Term life insurance does NOT accumulate cash value. It provides a death benefit only which means you ‘have’ to die to see any investment returns from your premiums and is used for short term needs such as paying off a car loan or mortgage or to pay for college.

Which is cheaper term or permanent/whole life?
Initially, term insurance is much cheaper, more affordable life insurance hands down. Which is why many people choose a cheap term life insurance policy. Term life insurance provides the largest amount of death protection (2x’s that of whole life) for your premium dollars. Which makes insurance ideal for young families; it’s affordable term life insurance. CAUTION: When the term ends so does your coverage. Premiums sky rocket with each renewal leaving the policy too expensive to continue. If you outlive yourterm life policy, like car insurance your premium dollars go to waste.

With permanent /whole life insurance, you pay considerably higher premiums for the same face amount of term life insurance, but they are less than the cumulative premiums you would otherwise pay if you were to keep renewing a term life insurance policy into advance age. This is because the interest earned on the cash value of a permanent policy helps offset the higher cost of straight life protection as the insured grows older.

*Before you buy life insurance, speak with an experienced life insurance agent (see how to choose a life insurance agent) who will LISTEN to your current and future needs. Life insurance agents represent you not insurance companies so it is the agents job to get you the lowest life insurance rate for the life policy that is appropriate, affordable and makes sense for you and your family.