Is Whole Life Insurance right for you?
If "How do I get a preferred health rate" is the number one question that I get from my clients, then "what's better, term or whole life insurance?" would be the second most popular question that I get.
Let me start this by saying that Term Life insurance almost always is the better solution for most people. That's because most people are on a budget and usually cannot afford to buy enough Whole Life or Universal Life or any kind of permanent insurance.
They want to... , but at the end of the day they find it too expensive, and they either take a term insurance policy instead, or... they compromise on the amount of coverage and buy a much smaller policy than they originally intended to, just so it would fit into their budget.
Unfortunately that is not a good thing, because it comes at a cost, and that is the cost of being under-insured, and should something happen, the beneficiary will suffer.
That being said, there is those that have a larger budget and are able to afford Whole Life Insurance Premiums, and for those I say, go ahead and buy that Permanent policy, as long as you are buying enough of it, I have no problem with that, it's probably a good move.
Buying Whole Life Insurance
The nice thing about buying Whole Life Insurance is that the premium stays the same for as long as you live. That comes at a cost though since Whole Life premiums are about 4-6 times more than term insurance premiums.
The nice thing about term insurance is that it is so much less expensive and it frees up your budget to do other things like invest more money, or even buy other sort of insurance policies such as Critical Illness or Disability Income policies.
One thing I would discourage you to do is buying a Whole Life policy as a savings vehicle. It has been proven that the Cash Values in a WL policy are just not enough to warrant that additional premium.
Alternatively, you can buy a T100 (Term to age 100) policy, which has no cash values, but guarantees the premiums to stay the same for all your life, so it is very much like a Whole Life plan. You can buy a T100 also in a Universal Life plan, and that will give you some extra features for creating Tax exempt Savings Account, but more on that in another article.
Finally, one good option on a Whole Life or Universal Life plan is a Quick Pay option, that can be 10 or 20 years, and what it does is guarantee that you don't have to make payments for that plan past 10 or 20 years, and the policy stays paid u after that, as long as you live, you basically own it.