Whats the difference between whole and term life Ins.?

Answer 1

I have to disagree with Ashli. I too am a licensed insurance and securities agent, and both term life and whole life (along with universal life and variable universal life) have their place in the market. I used to believe the "buy term and invest the difference mantra" before I got in the business, but there are several key flaws with that logic (sorry Suze Orman - you're flat wrong).

The assumption that "I won't need insurance later on, because my house will be paid for, my retirement will be funded, etc." rarely happens (I referenced a recent article on this - 50% of people ages 55-64 STILL owe money on their homes - when most term policies would get really expensive).

The answer is - find an agent who understands how to use the products in the marketplace, get educated on it, and decide for yourself what is the best fit for your needs and goals. We often use combinations of permanent and term for our clients!

Answer 2

Term life covers only a fixed period of time - 10, 20 or 30 years usually. At the end of that period, the insurance may continue BUT at a MUCH greater annual premium (cost). Usually it is so high that the customer drops the policy. In fact 97% of term policies never pay a death benefit as the insured person outlives the coverage.

Whole life or universal life offer coverage that will last much longer. The key question is "Will you or your family NEED life insurance coverage for longer than the fixed period offered by term insurance?" If yes then how much ceoverage.

I find that a combination of policies works well. Go talk to a licensed insurance agent to discuss your total insurance needs.

Answer 3

Whole life insurance policies build cash value over the years. You can borrow against the cash value or make a withdrawal from it. Term life doesn't do that and also it will have an age at which the policy terminates. The ones I've seen are usually around age 80. That doesn't happen with whole life. Term policies are a lot cheaper than whole life.

Answer 4

I am a licensed insurance agent and I only sell term insurance simply because in the early years when you have a lot of responsibility, you normally dont have a lot of money saved, Term insurance is easy to afford and the death benefit is usually more. In the later years you better have paid off your debt and saved for retirement in say a mutual fund or an IRA that way you dont need the savings element of Whole Life Insurance.

Answer 5

Whole of Life means the policy continues until you snuff it - provided that you pay the premiums. They know they are going to have to pay out sometime and so the premium is expensive. (Unless you are very young and fit).
Term assurance means that they will only pay out if you pop your clogs within the term selected. EG 5 years 10 years etc. They know there is a good chance they wont have to cough up at all and so the premium is cheap.

Answer 6

I believe the difference is that whole insurance covers you your whole life, and the plan can never change. Term life insurance covers you for a certain period of time, which will give you a chance to change your plan when the time has expired.

Answer 7

Better choose Whole L I