Whole life insurance Vs term life insurance?

Whole life insurance is the most expensive type of life insurance. The advantages of a whole life insurance policy include guaranteed death benefits, guaranteed cash values, fixed annual premiums. The primary disadvantages of whole life are premium inflexibility,the internal rate of return in the policy may not be competitive with other savings alternatives, and the cash values are generally kept by the insurance company at the time of death Term life insurance provides life insurance coverage for a specified term of years in exchange for a specified premium.

The policy does not accumulate cash value. A policy holder insures his life for a specified term. If he dies before that specified term is up, his estate or named beneficiary receives a payout.

If he does not die before the term is up, he receives nothing.

Term life insurance vs. whole life insurance. Which is a better choice for you? Term life insurance policies serve a purpose.

So do whole life insurance policies. The purpose of term life insurance is to protect your family for a specific time period. If you buy the right term life insurance, it does the job beautifully well.

On the other hand, whole life insurance has two purposes. The first is to protect your family. (And if you face estate taxes, whole life insurance does protect you against that problem while term life doesn’t.) The second purpose of whole life insurance is to make insurance companies and agents lots of money.

That’s why term life insurance is bought while whole life insurance is sold. Let me explain. When you buy insurance (whole or term), the insurance company knows what your odds are of surviving during the period of the insurance.

For example, let’s assume you are in excellent health, you are 35 years old and you want $100,000 worth of insurance. The insurance company sells you (and 5,000 other 35-year-old people) $100,000 worth of coverage. Let’s assume the insurance company knows that out of 5,000 35-year-olds, 20 are going to die this year.

That’s what actuaries figure out. That means that it’s probably going to cost the company $2,000,000 in clams this year.

Whole life insurance" Is this a good thing Asked by trollbu 51 months ago Similar questions: life insurance Business > Insurance.

It depends but you can usually get more coverage with term life. Any financial guidance I've read over the years, and I've read a lot, has always indicated that whole life is not the best type of policy because of the following: 1. If you want to invest money, do so separately.

You can pay lower fees and earn a greater rate of return with other investment vehicles. 2. If you want the most insurance for your premium, buy term.

Once you're done paying the mortgage and the kids have graduated, you shouldn't need life insurance anymore. Whole life can be good if you: 1. Don't have the discipline to invest and trust your insurance company to get you a fair rate of return backed by a strong financial guarantee, i.e.

, they're financially solid and will have the money for your beneficiary when you die or you when you cash the policy out. 2. Feel that you should have something in the end for the premiums you pay over a lifetime for insurance.As with any other money issue, your needs and drivers are the main deciding factors.

In the long run whole life is your best bet. A lot of people depend on the life insurance they have through work until they lose it when they retire and then they are so old that insurance is expensive. Term life insurance poses the same problem.

Lets say you are forty and you buy a twenty-year term policy. When the term runs out you are sixty, you have no insurance, every penny you have paid for that term policy is gone and by the time most people reach sixty they have a few health problems that make life insurance harder to get. Whole life is the only life insurance product that guarantees that you will have insurance when you die.

Sure you pay for it for your whole life (hence the name) but when you die your family is going to get a lot if not all of that money back. When a term policy ends that’s it, your money is gone and so is your insurance. I worked at a funeral home for many years and I can’t tell you how many times I have dealt with families that were having to deal with medical bills, funeral bills, and just day to day bills with the main breadwinner suddenly out of the picture.

Term insurance is fine if you want to cover a loan or make sure that your children get through college but if you want to make sure that your family is taken care of whole life is the only way to go. The younger you are when you get it the better because the premiums are lower and you never know when you will find yourself with high blood pressure or some other ailment that can make your premiums go up. Once you lock in a whole life policy your premiums should stay the same even if you get the plague.

Sources: my experience .

From the Smart Money magazine... From Smart Money magazine....OR MOST PEOPLE, the right type of life insurance can be summed up in a single word: term. But before we explain why, it's important to understand the differences between the most common types of insurance available. Our glossary can help with that, and decipher some of the more common insurance lingo.

The basic difference between term and whole life insurance is this: A term policy is life coverage only. On the death of the insured it pays the face amount of the policy to the named beneficiary. You can buy term for periods of one year to 30 years.

Whole life insurance, on the other hand, combines a term policy with an investment component. The investment could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against.

The three most common types of whole life insurance are traditional whole life policies, universal and variable. With both whole life and term, you can lock in the same monthly payment over the life of the policy. Read the rest of the article at smartmoney.com/insurance/life/index.cfm?..." rel="nofollow">smartmoney.com/insurance/life/index.cfm?... Sources: smartmoney.com/insurance/life/index.cfm?..." rel="nofollow">smartmoney.com/insurance/life/index.cfm?... .

I think so... ... but I do work (as a programmer) for a company that sells it. Don’t worry, I won’t give you the hard sell here, just some facts and figures to consider. Life insurance is something you buy to protect your loved ones, or others who have an interest in you, from financial hardship in case of your death.It’s not a fun thing to think about, but it happens to all of us eventually.

It’s the "eventually" part that should make you think about what kind of product you need. The most commonly held life insurance in the U.S.Is term life insurance. If you are working, your employer probably covers you up to the amount of a year’s wages, as part of your basic benefit package.

Term is the purest form of insurance. You buy it at rates that are based on your age, health, and other risk factors, and if you die during the term of the policy, the insurance company pays out the face amount to your beneficiary. Dead simple, pardon the pun.

However, the down side of term insurance is that the rates go up as you age, and all term policies have a finite period during which they are in force. If you buy a 10-year term policy, it’s up after 10 years, and if you have not died in that time, your money is gone. You can usually renew the policy, for the same coverage, but at a higher rate.

The rate keeps going up each time you renew, until the cost becomes prohibitive. In this sense, purchasing term insurance is like renting an apartment.It meets your needs, but your cash is gone, and your payments keep going up. Whole Life insurance is a kind of cash value insurance that combines insurance coverage with a cash savings element.

This allows the insurer to give you a level premium for the life of the policy - usually your entire life (hence the term, Whole Life). As cash value accumulates in the policy, the insurer’s net amount at risk, i.e. The money that will be paid out to your beneficiaries when you die, diminishes.

For example, if you have purchased a $100,000 insurance policy on yourself, and you die when the cash value of the policy is $25,000, the insurer’s net amount at risk is $75,000. Your beneficiary still gets $100,000, but $25,000 of that is the cash value that has accumulated in the policy. If you live long enough, the insurer’s risk goes to zero.

You get the $100,000 whether you die or not.In that event, the policy is said to have endowed. In this sense, purchasing whole life insurance is like buying a house. It meets your needs, but your money builds equity – and the payments do not increase.

Like a mortgage, many whole life policies have a finite premium-paying period. My company has several such plans, some of which are paid up in as little as 20 years. However, the policy continues to provide insurance protection until you die, no matter how old you are when that happens.

If your insurance needs change – for example, your children are grown, and the mortgage is paid – the policy can be redeemed for cash in whole or in part. You can use this money to fund retirement, or just to buy a fishing boat - it’s your money. If you are considering a whole life plan, get a participating policy from a mutual company.

Mutual companies are owned by the policy owners, who thus participate in the company’s profits. Policies like this pay a dividend on the cash value that accumulates in the policy. Dividend rates are not guaranteed, and vary from plan to plan, but are comparable to the rates you can get on CDs and other conservative investments.

The dividends can be used in several ways: 1. To offset the premium on the policy 2. To purchase additional paid-up life insurance 3.

Left on deposit with the insurer, in an interest-bearing account 4. Paid to you in cash Dividends that are used to purchase additional insurance have the effect of increasing both the cash value of the policy and the death benefit. Furthermore, the increasing cash value results in more dividends being paid out, so cash values can accumulate significantly.

This cash accumulation has some advantages: 1. It can be used as collateral for a low-interest loan with very flexible repayment options. The loan is issued by the insurance company, and it is not considered in your total indebtedness when you apply for other credit.2.It is not taxable to you so long as it remains in the policy.

Withdrawals, if you take them, are taxed only to the extent that they exceed the cost basis, i.e. , what you have paid in.3. It cannot be taken away from you, even by litigation or the IRS.4.

It passes tax-free to your beneficiary in the event of your death.5.It does not go through probate (unless you have named your estate as the beneficiary). It is, nevertheless, not for everyone. You will pay more for whole life insurance than you pay for comparable coverage with term (until the term is over, that is), and there is some opportunity cost associated with the difference.

For this reason, it has fallen out of favor with many people, who seek a higher rate of return on their capital. Nevertheless, it offers some unique advantages, only a few of which I have touched on here. If you are considering a whole life policy, talk to an agent.

Whole life plans are usually distributed through independent agents who can sell products from several different companies. When your agent explains the plan to you, you will be provided with a policy illustration, a document required by law, that shows you exactly what happens to the money you pay in, and exactly what your beneficiaries can expect when you die. Take this home with you and study it carefully.

Look at other things you can do with your cash. You may decide that whole life is the right thing for you to have, or you may pass, but I guarantee you that you will learn something. Sources: LOMA IchtheosaurusRex's Recommendations The Life Insurance Handbook Amazon List Price: $19.95 Used from: $9.86 Probably some more detail here.

Get a LOMA book if you really want to know how it all works..

" "Life insurance Question" "does anyone have any information on United Bebnifits Life insurance.

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Does anyone have any information on United Bebnifits Life insurance.

Whole life insurance" Is this a good thing Asked by trollbu 52 months ago Similar questions: life insurance Business > Insurance.

I think so..... but I do work (as a programmer) for a company that sells it. Don’t worry, I won’t give you the hard sell here, just some facts and figures to consider. Life insurance is something you buy to protect your loved ones, or others who have an interest in you, from financial hardship in case of your death.It’s not a fun thing to think about, but it happens to all of us eventually.

It’s the "eventually" part that should make you think about what kind of product you need. The most commonly held life insurance in the U.S. is term life insurance. If you are working, your employer probably covers you up to the amount of a year’s wages, as part of your basic benefit package.