Life Insurance Term Verses Whole – Is Term Life Insurance Better than Whole Life?



Posted: Tuesday, April 25, 2006

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There has been an on-going battle in the life insurance industry involving term life insurance and whole life insurance. The industry has survived the battle but the consumer is still asking the same question. Which one is better? The question is flawed because these two policies serve two different purposes. The real battle comes over the concept of buying term and investing the difference or the purchase of permanent life insurance. The proponents of buy term and invest the difference surmise that the policyholder would do better investing the difference in premium costs that you save by purchasing a term policy rather than a whole policy. Permanent life insurance was never created to be an investment. It was created to take care of permanent life insurance needs. The cash value accumulation within permanent life insurance is an added benefit and not an investment feature. The best life insurance portfolio is a combination of both permanent and term life insurance.

Permanent Life Insurance – Permanent life insurance should be purchased for permanent needs. Final expenses and life insurance for retirement are two basic permanent life insurance needs. Life insurance at retirement is critical because it gives you more options to use your retirement benefits for income rather than life insurance.

Term Life Insurance – Term life insurance is for temporary needs. Term life insurance will compliment your permanent base of life insurance. Decreasing term and level term riders can be added to your permanent policy to take care of temporary needs like mortgage protection and short term debt.

It is important to understand why you are purchasing life insurance. You will be much more content when you establish in your own mind the reasoning behind the purchase. Do a little mini-need analysis. Think about what is important to you and who is important to you. Life insurance is a gift of love.

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Top-level comments on this article: (2 total)
» left by Anonymous 4 years 246 days ago.
Life insurance was created to replace an income from a breadwinner to the family. This is why term should be the only method used. You can get term policies for up to 35 years now. The strategy is, have a policy that will last till you are not dependent on a breadwinner anymore (retirement), or till your financial liabilities are gone (mortgage paid, kids grown) and you have sufficient savings invested. If you need any protection past that point it could be a small $15,000 burial policy per person (dont forget inflation though). Don't spend any more on life insurance that you have too. With permanent Life insurance, the insurance company keeps your savings when you die in most cases. Something that is not talked about too much.
» left by Steve Potman 1 year 145 days ago.
Not only is a term life insurance plan the cheapest form of coverage, but it is definitely the best. After hours of searching for the best coverage I stumbled upon BuyTermLife. I was very impressed. I immediately was shocked with how easy it was to useBuyTermLife's term life insurance calculator . I fully recommend them.
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