Term Insurance vs Whole Life Insurance? Now which one do I choose?

These are the two choices available to you if you are considering to buy life insurance.

Let’s distinguish the differences between Whole Life Insurance vs Term Ins.

Term Insurance :

Simply put term insurance is pure Life Insurance for a set number of years . You can insure someone’s life for a set number of years and the monthly premium is fixed.

You are allowed to purchase a term policy for a time period of 1-30 years time . Your life insurance quote will be giving you a quote of your set monthly premium .

The beneficiary is named on the policy and upon the death of the insured the set amount is paid out to the beneficiary .

Term policies are much less expensive than Whole Life Insurance policies .

Whole Life Insurance :

With this type of life insurance you combine life insurance and add a savings or investment portion onto it . You are required to pay a lifetime of monthly life insurance premiums. It is life insurance for the entire life of the insured (plus an investment component) .

With the investment portion of whole life insurance you can choose to have funds go towards investments held within the life insurance company :

  • Bonds
  • Money-market
  • Stocks

Being much more expensive than Term Life Insurance whole life insurance also has a fixed monthly premium that you will be paying .

Other types of Whole Life insurance include :

  •     Traditional Whole Life Insurance
  •     Variable Life insurance
  •     Universal Life Insurance

Portion of your expensive monthly premium will go into the investment attached to your policy . You will have some investment options held by the life insurance company that holds your policy. You are able to “borrow” the money from your investment funds and pay it back with interest .

After the age of 50 the cost to insure someone gets much more expensive regardless of the type of insurance . For people over 65 term life insurance companies may or may not continue to insure them .

Term Insurance vs Whole Life Ins? Which one?

Term life coverage is no different from automobile insurance in that it is pure insurance. Compare whole life ins prices to term ins prices and with the savings on term life insurance invest them in any which way you would like. You have full control being in term life insurance.

Permanent whole life coverage is life coverage with an investment portion locked to it. With the limited number of investments available for your whole life insurance policy you are taking a higher risk with whole life coverage.

Our recommended strategy :

When getting your life insurance quotes you can calculate the difference between a term insurance policy and a whole life insurance policy . Purchase term life insurance and take the difference and apply it each month to whichever investment you choose: Stocks, Mutual funds, CDs, Bonds, Money Market, Savings Account at the bank .

You won’t ever have to borrow the money from your investments and have full control of your money. Plus you will be protecting your family and be insured .

Comparing Term Insurance vs Permanent Whole Life Coverage .

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