Whole Life Insurance Vs Term Insurance: What Are The Differences?
Life Insurance Agent: Vicki Gunvalson on Whole Life VS Term Insurance
“The difference of term to permanent. I think that term is being sold to a lot of clients under age 40 where I try to talk more permanent coverages when over age 40 with more on the estate planning side where it is something they want to have for their beneficiary’s benefit when they are an age 100.
So with term we could obviously only go 20 to 30 years but when we’re looking at 40-50 year olds I always talk to them about permanent coverage.”
Stay away from life insurance agents like Vicki Gunvalson
Term Life Insurance is the only option when it comes to life insurance coverage. When you have an agent trying to sell you Whole Life Insurance, Universal Life Insurance, Variable Life Insurance or Survivorship Life Insurance then be extra cautious with this life insurance agent because they may be looking at their own interest and financial gain rather than you and your loved ones .
Taking An In-Depth Look At Whole Life VS Term Life Insurance
Think twice about buying any type of whole life insurance (also known as Universal Life Insurance, Variable Universal Insurance or any type of Investment + Life Insurance). It has the sweet sounding “Cash Value” but it is basically the life insurance company’s money and does nothing for your bottom line. When you understand this you will never, ever consider buying any type of Whole Life Insurance .
Cash Value is the “investment” portion of life insurance that you can access through loans or withdrawals . When you take a loan out on the Cash Value portion your death benefit will be reduced by that amount until you pay it back in full with interest .
Life Insurance agents that tell you the benefits of cash value either don’t know how bad a permanent life insurance policy is for you or they don’t but chances are they know how much commission they stand to make from selling one of these whole life policies to you and have chose that route instead of looking in you and your family’s best interest .
Isn’t an investment in combination with life insurance great?
The cash value is mainly the insurance company’s money even though you have an “investment” within your life insurance policy . They will tell you that you can borrow what is supposed to be your money . They will tell you that you can borrow from it to pay for your children’s college expenses, medical expenses, emergencies or for retirement . Any funds that you take out from the cash value must be paid back with interest even though it is supposedly your money.
Why Must Interest Be Added To The Loan When I Borrow From My Own Cash Value? It Is Supposed To Be My Money Right?
Cash Value is more like the insurer’s money once they lock you in with a life policy. Your Cash Value money is locked into the insurance company unless the policy is canceled. Your investment money is the life insurance company’s money .
Once you have a whole life or permanent life insurance policy with an insurer you are basically locking in your money to the limited investment plans that the life insurance company has to offer. Their returns may or may not be that great and you can only borrow from the money making it a terrible investment.
If the life insurance agent first tries to get you to buy permanent life insurance first but then switches to term life insurance when you won’t budge on not buying whole life insurance just leave. Don’t deal with them any longer .
Term Coverage and Term Life Insurance Premiums
You are getting 100% pure life insurance with no investment . By buying term life insurance instead of purchasing a whole life insurance policy you will save a large sum of money. Outside of a life insurance policy you can take those savings and place them anywhere in any investment you would like (money market, CDs, bonds, stocks, mutual funds) or just leave them in your savings account .
Now with the savings you have 100% control of the money, never have to borrow or pay it back and you can choose what you would like to do with it. KEEP YOUR INVESTMENT AS FAR AS YOU CAN AWAY FROM YOUR LIFE INSURANCE COMPANY .
With a whole life policy you lose control of your money but getting a term life insurance policy you can free up a lot of money and you have full control on how you want to invest or spend it.
So forget Cash Value! It’s a shallow way for the life insurance company to try to get you to give them a larger amount of commission . Have FULL CONTROL of your money when you separate your life insurance and your investments .
Differentiating between Whole Life VS Term Coverage there is no other choice than to choose the latter: Term Life Insurance.