Term insurance vs whole life
insurance, which is better? The answer is both.
But probably not for you.
In many cases its a good idea to get a smaller whole life policy and a
large term life insurance policy. The reasons for this are many but lets
focus on the basic two that make this true for most of us.
- life insurance is cheaper when you are young
- gets more expensive as you get older
- term life insurance terminates after a specified period of time
- whole life insurance is very expensive
With these three facts you can see that one policy is probably not going to be the best fit for most people.
- when you are young you can get very reasonable rates on term life insurance and while life products
- combining a large face value term policy and a smaller face value whole life policy offers the most comprehensive coverage
- coverage into your later years in life
- high dollar coverage while you are still earning a living and getting a paycheck
- coverage after you retire and are on a fixed income
- coverage that is still affordable after you are on a fixed income
Why not just get a Large Whole life Policy?
Because a large whole life insurance policy will cost about 3 to 4 times more than a comparable face value term policy. So to give you 500k face value of coverage would cost a lot more than a 450k face value term plus a 50k whole life policy. But both policies will give you something that only one cannot offer. Coverage into your late years while still remaining affordable today and in the future.
What about a Term only Policy?
This is fine and to be honest it makes a hard argument against the term insurance vs whole life insurance question.
There are a few caveats, as you need a few other things to make a term only policy work well for you;
- invest in other resources such as stocks, real estate, etc.
- have significant savings
- have another source of income that can be passed down to loved ones.
Once a term policy expires that’s it, its done. As long as you know this and are planning and supplementing your estate in other ways it will work just fine to only cover your life during your earning years. Those assets that are gaining value will provide the financial staying power once you are older and not bringing in a substantial income.
More articles about term insurance vs whole life insurance.
Return to life quotes insurance from term insurance vs whole life insurance.