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term versus whole life - Which is better?

 

Term life versus whole life insurance comparison

 

We'll spare you the usual cliches.

 

"Term is like renting life insurance!"

 

You look across the web and you'll see lots of bad analogies.

 

Hey life insurance people aren't writers!

 

And writer's don't sell life insurance!

 

But....

 

If you're looking for life insurance coverage, one of the first questions will be..

 

  • What type of life insurance is there?
  • Which is best for me?
  • How can I spend more than I should?

 

Okay, maybe not the last one but without understanding term versus whole insurance, you might as well ask it!

Let's get started.

 

You can jump to any of these topics here:

 

Lots to cover.

Let's get started.

 

You can always quote term and whole life here:

 

Free online term life insurance quote

 

Our assistance is 100% free to you. Just call at 800-710-0455 or email us.

 

Let's start with the basics.

 


What is term life insurance?

 

Term life is just like renting life insurance.

 

Sorry...I had to.

 

Seriously, here's the definition of term life:

 

"Life insurance that pays a benefit in the event of a death for specified term of time"

 

That's not too bad.

 

You basically are picking a range of time to cover the unlikely (hopefully) event of a death.

 

Here are the usual period of times:

  • 5 years
  • 10 years
  • 15 years
  • 20 years
  • 25 years
  • 30 years
  • Till 65

 

In addition to this "term" or period of coverage, there's the face amount of coverage.

 

This can range from $5K to over a $1M.

 

The standard rule is 10x your annual income to replace but that's a whole other article.

 

$250, $500K and $1M are very common break points in coverage for term life.

 

Here's the deal...

 

After your period of time ends, the coverage ends.

 

20 years comes around and you're still causing trouble on this earth, that's it!

The coverage ends.

 

Good news is that you didn't!

 

What's the trade off?

 

Cost!

 

Term can be very affordable.

We'll touch on this later.

 

Next up...whole life.


What is Whole life insurance?

 

Whole life is the typical alternative to life term life.

 

The quick definition:


life insurance that pays a benefit on the death of the insured and also accumulates a cash value.

 

So what does this really mean?

 

There are two big differences. Actually three.

The first two are structural.

 

There is no term limit to the coverage.

 

As long as you pay the premium, the policy will pay a death benefit.

Whether the event occurs the following month or at age 99.

 

We'd like 99 please!

 

The other structural difference is the cash value element.

 

Whole life policies build up a cash value over time.

 

Traditionally, whole life has a smaller immediate death benefit and then builds on it with a cash value element over time.

What's the third element we mentioned above?

 

Cost!

 

Whole life policies on average are about 10x more expensive than term life for comparable face values.

 

That's a big deal.

 

We'll get into how to compare the two options especially in light of the cost difference.

 

Let's look at how to compare term and whole life.


What is the difference between term and whole life?

 

Let's remember the goal.

Ultimately, we're trying to cover the loss of income for a period of time (usually).

 

In light of that, let's look at how term and whole life are different:

 

term versus whole list

 

 

Cost

Term life is much less expensive. Usually 10x's less.

 

Period of Time

Term life will end at some point.

Whole life will not (unless you stop paying premium).

 

Cash Value

Term life only pays a benefit in the event of the insured passing way.

Whole life will build up a cash value over time that you can borrow against or draw down.

 

Those are the core differences between the two policies.

 

This brings us to the key question...which is better?


Is term or whole life insurance better?

 

In most cases, we have to go with term life.

 

For a very simple reason.

 

Cost!

 

Let's look at an example based on how people really work.

 

Let's say we have $50K income to replace in case a person passes away.

 

If we go by the 10x $50K rule, we'll need $500K coverage.

 

This could also be $500K mortgage and expenses to cover.

However you want to view that.

 

Now...term life for a given person may be $50/month for this amount with a 20 year term.

(age, area, and other factors affect this pricing).

 

What about whole life?

Here's the issue.

 

Whole life for a $500K face value might be $500/month!

 

That's not doable for most people.

It's probably not advisable for many more!

 

The proponents of whole life (usually someone who's financial interest is intertwined with you buying it) will say...

 

Hey...but you're building cash value with that extra money and you have a benefit no matter what age.

 

But at what cost!

 

What if we just took the $450 extra we would spend on the whole life and invested it.

 

Ummm...no brainer.

 

That's exactly what the life insurance company is going to do with it.

 

In the meantime, they'll pay for their profit. Their overhead. Their very large, beautiful buildings.

 

On your dime.

 

Look...we are life insurance agents but it's hard to justify this approach.

 

More importantly, if budgets ever get tight, guess which expense is getting cut.

 

Now you have no life benefit and you paid out all that money.

 

We see it all the time.

 

They may then say, "well just purchase a smaller face value and it will build over time".

 

Okay but the point of life insurance is to cover an unforeseen (and unexpected) death benefit.

 

If the insured passes away in year 2, you may have a whopping $10K life benefit.

 

Why even have coverage at that point.

 

Exactly!

 

There are very limited uses of whole life but they don't apply to vast majority of Americans.

 

You can quote both term and whole life together here:

 

Free online term life insurance quote

 

Of course, we're happy to help you with any questions at 800-710-0455 or by email.

 

We want to help you find the policy you want to keep!

 


Can a term life policy be converted to whole life

 

There can be options to convert term into permanent coverage depending on the policy and riders available.

 

This is probably a better option than stand alone whole life since we can opt in if needed (and if we qualify).

 

Ask us about which term life policies can be converted into whole insurance.

 

Call 800-710-0455 or email.


Is term or whole life cheaper?

 

Not even a contest.

 

Term life is cheaper.

 

So much so that it's hard to justify going with whole life.

 

You can take the different in cost and invest it for the "cash value" aspect of whole life.

 

The purpose of life insurance is to cover the financial toll of an unexpected death.

 

Any product that covers the possibility of something that is guaranteed to happen will be very expensive.

 

It's like having a health plan with no copays and no deductibles.

 

Those all went away!

 

Whole life covers a risk that is guaranteed to happen so you're going to pay more than it's worth by definition.

 

Otherwise, that would be a losing business.

 

Get term life and use the savings to invest.


What is the best carrier for term or whole life

 

This depends on a host of factors:

 

  • How old you are
  • How much life insurance you need
  • Traditional life versus non-medical exam coverage
  • Your health status
  • Your legal history (driving record, criminal, bankrupcies, etc)

 

Here's the deal.

 

Each life insurance carrier has specific niches in which they excel!

 

They online quote you can get anywhere (including right here) is just a ballpark with life.

 

The actual rate comes back based on many different variables.

 

We need AI to actually cross reference all that can affect it!

 

Until our robot overlords take over, give us a call at 800-710-0455 or email us.

 

25+ years experience (your rep...yes, your rep) will quickly narrow the options for you based on your situation!

 

 

No exam life insurance is quickly becoming the go-to process for the market so we put together a comparison here with term and whole life options (non-medical exam):

 

Comparison of non-medical exam life insurance carriers

 

Again, give us a call at 800-710-0455.

Our assistance is 100% free to you!

 


Is whole life the same thing as permanent coverage?

 

Yes.

 

The both mean the same thing.

 

Basically, a plan that WILL pay a death benefit as long as you pay the premium.

 

  • Whole life.
  • Permanent life.

 

Both the same thing.


What are the pros and cons of term life insurance?

 

Term life pro's:

  • Inexpensive
  • Can afford larger face value of coverage
  • Can be non-medical exam
  • Easier process to setup

 

Term life con's:

  • Will stop at end of term (i.e. after 10 years)

 


What are the pros and cons of whole life insurance?

 

Whole life pro's:

  • Does not "term out"
  • Will pay a death benefit as long as it remains in force (premiums paid)
  • Will grow cash values over time which can be borrowed against

 

Whole life con's:

  • Very expensive
  • Cash values don't match extra premium paid...nearly!
  • Risk of lapsing due to cost

 

Those are the core benefits and issues with both term and whole life.

 

Generally, cost is king.

 

You have to be able to afford the coverage over a long period of time.

 

All these points disappear if you lapse the whole life policy!

 

We're happy to help you compare.

 

You can quote both options here:


Free online term life insurance quote


What is whole life cash value?

 

Whole life is really the combination of two things.

 

A death benefit

It has an immediate death benefit that's usually smaller

 

Cash Value portion

Secondly, whole or permanent life insurance plans have a side component...cash value.

 

Essentially, this part will slowly build over the life of the policy.

In many ways, this is an asset that you (or the beneficiary if you pass away) will own.

You can borrow against this cash value portion and even use it to pay premiums in some situations.

 

It's basically a savings account attached to your death benefit.

 

The theory is that you are paying much more in premium but you will have this growing store of money which will ultimately pay out as a death benefit.

 

The problem is the cost.

 

What you're basically doing is having the life insurance company invest your extra premium (for them) and then they chip off a piece to you now and then.

 

This cash portion is expensive for what it is.

We're happy to help you understand this aspect and compare it with term life.

 

Just call 800-710-0455 or email us.

You can quote term or whole life here.

 


Is term or whole insurance better?

 

Better for whom?

 

If you mean better for the life insurance carrier or the life agent...WHOLE LIFE!

 

By far!

If you mean better for you, the insured...

 

Term life - 99% of the time.

 

Let's look at the two "talking points" used to push whole life.

 

You're guaranteed to get a benefit!

 

You'll build up this nice cash value!

We'll break those down (and then apart).

 

Guaranteed Death Benefit

 

First, whole life is so much more expensive, that a lot of those policies eventually lapse due to non-payment.

 

So much for guaranteed.

 

Secondly, insuring 100% of any risk (be it car, house, health, etc) makes no sense.

 

By definition, you'll pay 100%+ of the risk unless you've found a non-profit, non-cost life insurance carrier.

 

Those big skyscrapers in every major city don't come cheap!

 

A guaranteed death benefit means you're probably paying double that amount in premium.

 

We also have to take a much smaller death benefit due to cost versus term life.

That defeats the purpose of what we're trying to do.

 

Would you rather leave $50K or $500K?

 

What about the second piece...the much ballyhooed cash value?

 

You'll Build Up This Nice Cash Value!

 

Small print...

 

After we take out:

  • Expenses
  • Profits
  • Taxes
  • Payroll
  • Marketing
  • Investment gains
  • Overhead
  • Travel
  • Pretty skyscrapers

 

There's been a real push in the investment world to both publish and bring down expense ratios.

The "cost" a mutual fund or etf charges to manage your money.

 

It's front and center now.

 

Good luck getting close to that with whole life cash values.

The mechanism resides behind a thick, black curtain.

 

The Wizard of Oz has nothing on life insurance carriers!

 

It doesn't make sense to pay a dollar to get maybe 65 cents back.

Get term life for a longer period of time and invest the difference.

 


How to quote term and whole life?

 

It's easy and very important.

Seeing the premium difference usually answers the question pretty quickly.

 

How to quote term and whole life:

 

  • Click here to access instant quote online
  • Get quote across both term and whole life carriers
  • Please use our free service for 5 minute price check

 

It's invaluable.

 

The quotes are just quotes with life insurance.

Your health and situation really affects what the best ACTUAL rate will be.

 

Call us at 800-710-0455 or email us to learn how to work the system.


How to enroll in term or whole life

 

This is where a little hand-holding really helps!

It will save you time, money, and sanity!

 

To enroll in term or whole life coverage:

 

  • The easiest way is to enroll by phone at 800-710-0455

 

We can take a one hour process (completing online or paper application)

 

And condense it down to 10 minutes.

 

More importantly, you'll make sure you have the rate and quote.

Health and background information can change the best approach in terms of cost.

Another carrier may be more lenient with your bankruptcy or cholesterol than the one you picked based on online quotes.

 

There's no way around that.

 

Use our 25+ years experience to find the best rate.

 

We want to find the plan that you want to keep!

 


Wrap on term versus whole life insurance

 

It's pretty clear on our opinion regarding term versus whole life.

 

We're in good company.

 

Suzy Orman and a host of pretty smart people all agree.

 

For a good reason!

 

Whole life takes advantage of people's misunderstanding regarding cost and risk.

 

For some people, it feels really comforting to know there WILL be a benefit.

 

Many people have a almost a religious avoidance of paying for something they may never use.

They just can't wrap their heads around it.

 

Life insurance (or any insurance really) is tricky.

 

We hope to never need it but if we do, it's so so important to everyone we love.

The goal then is to reduce the cost as much as possible.

 

Don't overpay for a guaranteed something versus pay very little for a possible something.

 

It's in your interest financially.

Of course, we're happy to help you explore these options.


Call 800-710-0455 or email us with any questions.

 

There's no cost for our assistance.  Zero.

 

Ultimately, we want to find the policy you want to keep!

 

It's in our interest and yours. 

 

term life insurance guidance and help

 

You can run your Term Life Quote with Expert Assistance here to view rates and plans

 

Again, there is absolutely no cost to you for our services.  Call 800-710-0455 Today!

 


 


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