whole life
term life

 

  • Joe 3:03 am on October 15, 2009

    Term life insurance is cheaper but does not build up value. Whole life insurance is more expensive, but builds up value.

    For most people it is best to buy term life insurance. Life insurance plans that builds up a cash value like whole life, universal life, et cetera are rarely the best choice. If you look at financial sites not run by insurance companies, they are almost unanimous in recommending term life insurance. Look at big name sites like Yahoo,CNN, Motley Fool SmartMoney.com and Kiplinger’s, and they all recommend term life insurance for most people.

    However, you will find many websites out there that promote whole life insurance and disparage term life insurance. They are almost all run be insurance companies. Insurance companies make more money from these policies and it is in their interest to push them.

    Whole life has the advantage of having a built-in savings program, but you lose a lot of money to high commissions. It is usually better to buy term life insurance and invest the money you save in an IRA, 401K, or mutual fund.

    There are, however, rare cases where whole life is better and these are discussed in the articles below.

    Sources: Term vs. Whole Life Articles:
    http://www.fool.com/insurancecenter/life/life06.htm
    http://finance.yahoo.com/insurance/article/101749/Term_or_Whole_Life?http://money.cnn.com/pf/101/lessons/20/index.html
    http://www.smartmoney.com/insurance/life/index.cfm?story=whichtype0205
    http://www.kiplinger.com/basics/archives/2003/03/life3.html

    General Information on Life Insurance:
    http://www.fool.com/insurancecenter/life/life.htm
    http://finance.yahoo.com/how-to-guide/insurance/12823
    http://money.cnn.com/pf/101/lessons/20/index.html
    http://www.kiplinger.com/basics/archives/2003/03/lifeinsurance.html

  • Don 3:03 am on October 15, 2009

    You buy it for a specific length of time depending on your age. You can get it for 10, 20 or 30 years. The premiums stay the same and at the end of the term the insurance expires and you have nothing. Whole life is much more expensive, they take some of your premium and invest it so that after several years you have some equity built up that you can borrow from or cash out to get the money. Smart folks buy term and invest the difference of the payment between term and whole life. You will almost always make more money this way.

  • Life Insurance Analyst 3:03 am on October 15, 2009

    Term insurance is the simple life insurance that covers you for a specific period (from 1 year to 35 years). Majority of term policies guarantees you coverage up to age 95 to 100. That means you can renew without having to proof of insurability. Though, some companies converts your term policy into a cash value life insurance (such as whole life) or your term policy just terminates at the end of the term. Term insurance is inexpensive and is a good tool to use for financial planning. Since it doesn’t cost much to buy life insurance, you should be saving or investing your money. If you die during the term, your beneficiary (or beneficiaries) will get the death benefit and take control of your assets. If you outlive the term, at least you will have a good size of money saved for retirement.

    Whole life insurance is more expensive than term insurance. Whole life insurance is two products built into one policy. These products are life insurance and cash value. Premiums remain level for the entire life of the policy. No cash value is built during the first 2 years and after that, it grows from 0.1% to 3%. If you wanted to use the cash value, you have to borrow it and pay loan interest between 6-8%. If you die someday, the insurance company keeps your cash value, but at least your beneficiary will get the death benefit.