do any one know which is the best life insurance,whole life or term?

Answer 1

Whenever this topic comes up, you always see, "whole life is the worst possible investment one can make, so stay away from it." Personally, I'm not a big fan of absolutes, so statements like that always make me a bit leery.

The above statement completely misses the point that we're talking about INSURANCE not INVESTING. The purpose of insurance is risk transference, not return on investment.

Having said that, I think your question is flawed because neither one is better than the other. They just do different things. Term insurance protects against death within a specified period (usually 10, 15, 20, or 30 years). Permanent, aka Whole Life insurance is designed to run up to age 100, or death, whichever comes first.

I would generally agree with the position that one could make a better return on investment using the "term-invest the difference" philosophy, but the problem is, life is not always a perfectly straight line as financial projections would have one believe. Companies get down-sized, jobs get lost, people get sick, etc. In my business, I have people hitting age 55-65 buying new homes and coming to me to buy term insurance. Oops! Now the rates are too high because they are either a) too old and the rates are too high, or b) in poor health and are therefore uninsurable. In the "buy term, invest the difference" model, life changes are not taken into account. It is assumed that one will never buy another house, have another kid, or need to raise grandchildren. Also, most people that I know of take the "buy term, buy pizza and new cars" approach. They believe that they at least got half of the equation correct, so they're feeling like big time financial planners.

My personal philosophy is having the bulk of my insurance dollar spent on term insurance, but reserving a portion of it for a permanent/Universal Life policy. That way, you can hedge your bets for the future. If you exceed a point in your life where you can purchase more term insurance, but you're not quite ready to die yet, that permanent policy will still be chugging along.

Answer 2

It depends on your circumstances.

There are two types of Life Insurance term and permanent.

Term lasts a certain period of time and then you either need to re-apply or the rates will go up on you. You cannot get term past the age of 70 (usually) and the premiums then are outrageous.

Permanent Life Insurance is divided amongst 3 main types, Whole, Universal, and Variable. All of these policies build cash value that can be borrowed on, cashed in, or converted to an annuity to pay you a monthly income the rest of your life.

Whole is the most basic type. Whole builds a predictable cash value and the premiums are also locked in. It will last your entire life as long as you pay the premium and at age 100 will pay you the face amount of the policy. Due to the low internal rate of return, it is ussually the most costly.

Universal Life is much like whole life with a few exceptions. You can make much larger contributions to the policy and you can skip payments if you have enough cash in the policy. Universal is like a flexible payment whole life policy in most respects. (This is a simplification as there are a few more differences.)

Variable Universal or Varible Life is just like Universal life with the main difference being that Variable allows you and not the insurer to invest the money. This is my personal favorite, I have run several spreadsheets to determine if this makes a good investment (investment, not just for the life insurance aspects) and with all things being equal, after the Roth IRA, and the match from the 401(k), this is a fantastic investment as the value grows tax free and when you borrow money against the policy, the money is still invested and you take the borrowings tax free.

You need to determine if the coverage you need is short term (term) or permanent in nature (Whole, Universal, Varible) Most peopel have temporary needs, like covering a mortgage and permanent needs like burial expenses so in most cases a combination of the two is the most effective strategy.

A couple of important things to remember are:
1) If you are in poor health now or in the future you may not be insurable, with permanent insurance you do not have to worry about this but with term at some point you will need to reapply (and you will be older).
2) Permanent insurance is more expensive because you overpay when you are younger but underpay as you get older.
3) Permanent insurance if funded adequately will eventually pay for itself and you can quit paying on it.
4) The best example is that buying Life Insurance is like a choosing a house. Term is like renting less expensive and you get nothing back when you move and Permanent is like owning a home it is more expensive but it builds cash and eventually can be paid off.

Hope this helps.

Answer 3

Which is the best life insurance for you depends on your specific situation and your needs.

If you are young with a family and you need life insurance for a specific number of years - 1-30 years - then term life insurance may be the most affordable option for you. It would provide you with the maximum amount of life insurance protection at the lowest price.

If you can afford to pay more, and you want the life insurance protection for your entire lifetime, then whole life insurance may be the best option for you.

Term life insurance does not build cash value. Term insurance provides only life insurance protection for the number of years specified in the policy.

Things you may want to consider are the following:

1. How long do I need the life insurance protection?
2. How much life insurance do I need?
3. Which life insurance will provide me with the maximum amount of coverage at the lowest price?
4. Which company has the best financial strength rating from A.M. Best?

Level term life insurance is one of the most popular types of life insurance purchased today. Level term provides you with a death benefit and rates that remain the same for the entire term of the policy.

That way you could get term life insurance for a 20 or 30 year term and be sure the premiums will be the same and the coverage amount will be the same for the entire policy.

One thing to be aware of, if you outlive your term life insurance policy, the policy expires and you have no coverage. If you need a new life insurance policy at that time in the future, you may have to take a physical exam to qualify, and the premiums will be higher - based on your age and health at that time.

I hope that helps! Best of luck to you and your family.

For a Free Tutorial on term life insurance you may want to visit http://www.term-life-online.com/tutorial.html

Answer 4

No one here can tell you what is best for you unless you want to post all of your personal information - income, savings, debts, dependents, health etc and especially your goals.

Term work very well if you either die during the term or have enough savings by the time the term expires so that you and your dependents won't need any insurance. That means having all your current and future debts paid and sufficient savings to pay your future medical bills. The later is very rare for most people.

Hint: You can buy BOTH term and permanent insurance (I have both).

Go meet with a licensed agent or financial planner to discuss your personal situation.

Good Luck

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Answer 5

ALL insurance is actually term insurance. A whole life plan uses a small part of the premium to buy term insurance. The remainder is split between commissions for the agent and an 'investment' plan. The return on the investment is below what you can make on your own.

In case my answer got lost above, TERM is ALWAYS better.

Answer 6

I was a Life Agent for 35 yrs and tell you it depends on your situation and the amount of money you can spend for coverage that you can afford and not drop the coverage later.
I think that you should purchase as much as possible if you have family responsibility. You are always able to buy more term coverage that whole life for the same amount of money.
I think this best suits most peoples needs, especially younger persons who have families. However, everyone should discuss their needs with a honest agent who is interested more in you rather than how much commission he will paid for the sale. Because each case is different there is no "one fits all" solution.

Answer 7

Term life is pure insurance - the highest amount of coverage for the lowest rate. That does NOT mean it's perfect for EVERYONE, but it is usually the best financial product for MOST people.

THERE ARE EXCEPTIONS.

What you need to do is set the financial goal FIRST, then find the product that meets it at the lowest cost. That includes life insurance.

Answer 8

Term. Whole life is the worst possible investment. A good suggestion is buy 10x to 20x your annual income in level 20 yr term insurance.