Should I buy Term Life Insurance or Whole Life Insurance?
Many clients question whether it is better to own Term Life Insurance or Whole Life Insurance. Both types of coverage are very different and both serve different purposes. There are large groups of people on both sides of the subject and I don’t advocate for either one, but instead realize there are advantages to both sides. In the end, I feel it is best to pick the best type of coverage based on your situation and most of the time it is best to have some coverage of both types.
For the followers of Term Life Insurance, they believe it is better to own cheaper Term Life coverage that provides a lower premium and use the savings to invest into something such as stock or mutual funds. For example, if someone were to compare rates on $100,000 in coverage on whole life and term life for 20 years they might find the following. For example, a Term Life policy for a 50 year old would be around $20 per month where Permanent Life would be around $100 per month. The followers of the Term Life concept believe it is better to take out the Term Life Insurance policy and invest the other $80 per month over that 20 year period of time and then self-insure after the age of 70 with the money invested.
The clients that believe in whole life insurance or final expense want a guarantee that the insurance will be there no matter what age they are when they expire. They believe that it is important for the policy to grow cash value that they always have access to even if it doesn’t earn as much as it would in the stock market. Also, the reality is that most clients that take out Term Life insurance will not be disciplined enough to invest that $80 each month and will just be left with no coverage and no savings at age 70.
Both sides have a great argument and who is to say which side is right. In the end, it is best to obtain the coverage that is best for your situation. Obviously, Term Life Insurance is much cheaper than Whole Life Insurance coverage, but it also ends at a predetermined date. It has often been stated that with Term Life you are renting a policy where with Whole Life insurance you own the policy. If your goal is just to cover a mortgage or only insure for a short period of time then Term Life is the best option. If your goal is to have guaranteed coverage to pay for final expenses or income replacement that you can never outlive then Whole Life insurance is the best option.
The best option is to talk to an independent insurance agent at Green Country Financial for a free life insurance assessment. This will insure that you get the best coverage for you and your family. Also, it is possible to get a Term Life Insurance Policy now that covers a higher amount for up to 30 years and then convert it to a Permanent policy before you are age 70 without insurability. This can insure that you are getting the best possible policy both now and in the future as your situation changes. Call us at (866) 406-6773 for a free life insurance quote and assessment.