The Great Insurance Debate

Updated: Oct 19, 2020

Let's tackle some of the issues on the Term vs. Whole Life Insurance debate.


First off let me say it's not about choosing one type of life insurance or the other. They are different products and serve different purposes. And you can even have both at the same

time. But it is good to know the basics of each and the purpose of how they function.


Here's the highlights of Term Insurance:

Singular Purpose - Death benefit.

  • A temporary insurance that lasts for a "term" of several years and will have to be renewed or cancelled at the end of the term.

  • Pays out a death benefit upon insured's death. May have stipulations.

  • Do not get any money back if insurance is cancelled.

  • Lower premiums and can provide immediate coverage with a clear expiration date.

  • Premiums can increase dramatically as you get older.


 

Here's the highlights of Whole Life Insurance:

Multi Purpose - Death benefit, secure growth, tax advantages, can borrow from policy, protected from creditors.

  • Insurance meant to build cash value for your whole life.

  • Higher premium, paid until a certain age or amount (paid up).

  • Premiums are added to your cash value, which continually increases overall policy value. Compound interest will "snowball" and your value will increase dramatically after the first few years.

  • Premiums will not increase and are locked in.

  • Pay's a death benefit upon insured's death.

  • Death benefit can be used while you are still living.

  • Insurance pays a guaranteed annual dividend into your account.

  • You can borrow against the cash value in your policy.

  • Can supplement a retirement account, as it is a save savings that grows over time.


 

So, now that you know a little bit about the type of policies, you can make a more educated decision when it comes to purchasing a policy or renewing your term policy.


And here's where I'll give you my thoughts.


Aside from the money savings of a term policy, which I get it- it can be a major factor, there is no advantage in my opinion to having it. Basically, if the insured doesn't die to make a claim on the policy you don't get any of that money back that you've paid for premiums over the years. But with a whole life cash value policy you get so many functions that are impressive! Death benefit, yes of course. But you can save for retirement, save for college, borrow against your cash value in the policy for a loan to do whatever you want, and pay it back on your terms! It serves as a great foundation for building wealth. It is a Tier 1 Asset, which means it's the safest and most stable asset out there. It can function as the perfect way to fund retirement, investments, business expenses and real estate ventures. It will never lose value like a 401(k), IRS or stock market holdings. There are some many opportunities to use the cash value policy to fund the life you want. It can create a sense of stability in a world of chaos. You can sleep at night knowing that no matter what the rest of 2020 brings or who gets elected your financial future will not be up in the air to where the economy heads or the stocks jump or dive. It is a sound strategy for saving and building wealth that has been used by the wealth for over 150 years. Trusted and proven. I'll take that!


Just so you know there are hundreds of insurance companies who offer life insurance products. Not all products are the same! There are just a handful of companies that have a product specifically set up for you to use to it's maximum effectiveness as a cash value whole life policy. If you are interested in learning more and finding out which specific policies best suit your needs, please set up a phone call with us here. No cost. We just want to make sure you get the knowledge and information to make the best decision possible for your needs!


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