Term vs Whole Life – The Age-Old Question?
“Ladies and gentlemen…in this corner we have whole life…hailing from the annals of the original life insurance option, the grandfather of coverage, WHOLE LIFE!!!!….and in this corner, the level-one, less at stake, the here-and-now…TERM LIFE!!!!” Let the term vs whole life bout begin!
The head-to-head battle between whole and term life insurance has been waging on for some time now, with Term Life taking a considerable lead in the battle of life insurance policies. So, who’s winning? Did one come out on top? Should I care? Are the Bears gonna do it this year? Well, there’s always the Cubs and Blackhawks.
What’s the Difference?
Realistically, there are advantages to both. And it really depends on what you are most interested in. Long-term life coverage or short-term coverage. Answer this question, and you’re almost half way there…better than the Bears, for sure.
WHOLE LIFE INSURANCE POLICY
We think that whole life may be getting a bad rap as of late. There are still advantages to getting whole life, but here are some things to know when you weigh out your whole life options:
According to Allstate Insurance and their Whole Life Advantage Insurance Plan ®
- Death Benefits never go down if you continue to pay on your policy.
- Regardless of market conditions, your cash value will never go down and you will continue to accumulate interest on your investment.
- Your payment will never go up.
As you can see, there are some desirable elements to a whole life plan.
Term Life Insurance Plans have some unique characteristics.
- In general, this plan is easier to understand and has the lowest premiums.
- Often called “pure life insurance”, term life provides coverage for a certain period of time.
- This policy has no cash (out) value.
When considering a life insurance plan, you must be willing and ready to answer these questions:
- What is your long-term goal?
- How old are you?
- Are you healthy? Be honest.
- What is your family health history?
- When do you plan on retiring?
- Do you have a wife?
- Do you have kids?
- What’s your lifestyle like?
- What is your debt to earnings ratio?
Interestingly enough, all of these questions should be asked by you and then by your insurance agent. It’s the only way you can get realistic coverage. Uncomfortable? Maybe, but that’s what your insurance agent is there for…to discuss these things. We’re like a counselor, a confidant and your best friend when it comes to taking care of you and your family with comprehensive and affordable life insurance that will act when you need it.
GET THE WHOLE PICTURE
Just like those top-secret briefings you see in the movies, all redacted and blacked out don’t give you the whole picture. Not reading your entire insurance policy will only give you part of the story and this can be very costly.
If your life goals are security, cash value growth and a possible source of cash down the road, then Whole Life Insurance may be a very viable option for you.
TERM LIFE INSURANCE
Considered the reigning champion of life insurance options, Term Life Insurance does offer a lot of front-end desirability. And, probably will give you a much larger payout and lower payments if you happen to need it before the end date.
WHO’S THE WINNER?
Oh. We forgot to tell you about hybrid life insurance plans, also called “Universal Life” life insurance plans.
UNIVERSAL LIFE
Universal Life Insurance could be the challenger to the throne in the life insurance superiority battle. More-and-more people are considering this play type, primarily because it kind of merges the best of both term and whole life insurance.
UNIVERSAL LIFE EXPLAINED
Universal Life Insurance offers lifetime coverage with adjustable premiums and builds cash value, much like a Whole Life Insurance Plan vs Term Life, which usually offers a maximum of 30 years with no adjustable premiums and doesn’t build cash value. It differs from whole life primarily because universal life offers an adjustable premium and whole life insurance does not. With Universal Life Insurance, the cost of insurance must be covered so the policy remains in force, but premiums may be shifted over time based on the policyholder’s needs. Although whole life insurance and universal life insurance both fall into the category of permanent coverage, the differences between the two plans are in how the cash value accumulates.
This plan is best outlined with your insurance agent due to the varying plans with varying insurance agencies you are talking to.
We hope this helps understanding Term vs Whole Life Insurance. We’d love your comments!
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