If you are even considering to buy life insurance do you have the hardest time when it comes to deciding on Whole Life vs Term Insurance?
One life agent named Vicki Gunvalson (not affiliated with our organization) vaguely states…
“The difference of term to permanent. I think that term is being sold to a lot of clients under age 40 where I try to talk more permanent coverages when over age 40 with more on the estate planning side where it is something they want to have for their beneficiary’s benefit when they are an age 100.
So with term we could obviously only go 20 to 30 years but when we’re looking at 40-50 year olds I always talk to them about permanent coverage.”
In contrast to what Vicki states we wholeheartedly, wholeheartedly believe that no one should purchase anything other than term life ins. When you have an agent trying to sell you Whole Life, Variable Life Insurance or Survivorship Life Insurance then be extra cautious with this life insurance agent because they may be looking at their own interest and financial gain rather than you and your loved one.
Whole Life vs Term Insurance
Permanent Insurance, which includes Whole Life, Universal Life, Variable Life and Survivorship Life insurance has a built in “Cash Value” but when you understand that the cash value really means nothing to your bottom line you will never think about purchasing any of the types of permanent ins.
Cash Value is the “investment” portion of life ins that you can access through loans or withdrawals. The death benefit may be reduced with the withdrawals and there may be some charges which could affect your policy in the future.
Also, you definitely do not want to have life coverage forever. If you understand how expensive continuously paying into a life policy can be you will definitely rethink this purchase. At age 100 the cost is $1000/month for every $1000 of coverage. So if you have a $500,000 policy it will cost you $500,000 per month at age 100. You only need it when you are younger and when you have dependents counting on you for your income. Outside of that temporary time period you do not need this coverage. Again, it is only for a temporary period of time.
Insurance agents that tell you the benefits of cash value either don’t know how bad a permanent insurance policy is for you or they don’t but chances are they know how much commission they stand to make from selling one of these whole life policies to you and have chose that route instead of looking in you and your family’s best interest.
What? Do you mean I get to invest with a life policy? Isn’t that wonderful?
Yes, there is an investment portion to these permanent life policies but in reality the cash value is never really yours. It’s the insurance company’s money and they will allow you to borrow from it. They …