Do you have trouble picking between Whole Life and Term Insurance if you're thinking about purchasing life insurance? FFL

Vicki Gunvalson, a life agent who is not linked with our organisation, says vaguely...

"The distinction between a term and a permanent position. I believe that phrase is being sold to a lot of people under the age of 40, while I attempt to talk about more permanent coverages with clients over 40, more on the estate planning side, where it is something they want to have for their beneficiaries' benefit when they are 100 years old.

So we could only go 20 to 30 years with term, but when we're talking about 40-50 year olds, I usually recommend permanent coverage."

In contrary to Vicki's assertion, we strongly believe that no one should buy anything other than term life insurance. When a life insurance salesman tries to sell you Whole Life, Variable Life, or Survivorship Life Insurance, be extra wary since they may be more concerned with their personal interests and financial gain than with you and your loved ones.

Term vs. Whole Life Insurance

Permanent insurance, which includes Whole Life, Universal Life, Variable Life, and Survivorship Life insurance, has a built-in "Cash Value," but once you realise that the cash value has no bearing on your bottom line, you'll never consider buying any of these forms of permanent insurance.

The "investment" element of life insurance that you can access through loans or withdrawals is known as Cash Value. Withdrawals may diminish the death benefit, and there may be costs that will influence your policy in the future.

You also don't want to have life insurance indefinitely. When you realise how costly it is to keep paying into a life insurance policy, you will likely reconsider your decision. For every $1000 of coverage, the cost is $1000 per month at the age of 100. So, if your policy is worth $500,000, it will cost you $500,000 per month when you reach the age of 100. You only require it when you are younger and have dependents who rely on your income. You don't need this coverage outside of that limited time frame. It is, once again, only for a limited time.

Insurance agents who tell you about the benefits of cash value either don't understand how bad a permanent insurance policy is for you or don't care, but chances are they know how much commission they'll make if you buy one of these whole life policies and have chosen that route over looking out for you and your family's best interests.

What? Do you mean I can invest in a life insurance policy? Isn't that fantastic?

Yes, these permanent life insurance have an investing component, but the cash value is never truly yours. The money belongs to the insurance company, and they will let you borrow from it. They'll tell you that you can use it to pay for your children's college tuition, medical bills, unexpected expenses, or retirement. However, you must repay the monies to the life insurance provider with interest.

Borrow money and pay it back with interest? Are you serious? Isn't it true that my money has a cash value?

I'm sorry, but it isn't true. You're putting a huge premium into an investment + life insurance that you don't have control over until you cancel the policy. It's the insurance company's money, after all. Furthermore, the investments they offer you are limited, and they earn additional commissions on the investments you choose since those investments, whether mutual funds or money market funds, are held until the insurance company from which you bought your policy purchases your policy. You just have a few investing options, and they may not be the finest funds to choose from.

After attempting to sell you whole life / permanent insurance, if the life agent turns to term insurance and tries to sell you that type of insurance, simply leave the office. Dealing with them is no longer an option. They tried to offer you an insurance plan that was not in your best interest and now have to sell you a product with a smaller commission.

You Will Have Term Insurance and Savings

Term insurance is insurance alone, with no investment component. When compared to obtaining a whole life policy, the amount of money you save by getting a low-cost term life coverage is significant. NOW, put those savings into any investment (mutual funds, equities, bonds, or the money market) that you want.

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