Difference Between Term Life And Whole Life Insurance

Can Someone Tell Me The Difference Between Whole Life And...

New postby Gia » 25 Oct 2009, 16:08

Can someone tell me the difference between Whole Life and Term Life insurance? Help?

I'm not sure if this is the right catagory, but I need some answers before I change insurance companies, so any help here is greatly appreciated.
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New postby Terrilyn » 25 Oct 2009, 16:08

Most of the big name financial advisors recommend that you buy the insurance that your need. If you need coverage for a period of time buy that, if you want a death benefit until you actually die, then go longer.

Instead of whole life though go with (consider I shoudl say) a universal life that gives you a guaranteed premium until you're 100 years old.

A combination of policies can work for some, but if you make less than $100,000 per year then (shooting from the hip) a term policy OR even better a return of premium term policy will suit most of those folks.

Use the tool on my site to quote the different available plans. It requires no personal information yet it quotes the carrier direct rates (which is lingo for the rate you'd pay) from ~150 different carriers.

Look at term, return of premium term and to age 100 coverage....

http://insurancepickle.com/life-insurance

For the record I'm not a fan of whole life at all, but that doesn't mean the product doesn't fit the situation. AND, I'm not a fan of these hokie companies trying to sell a whole life insurance policy and become 'their own banker.' There are plenty of scams surrounding the sale of the product, but that in and of itself doesn't make it a bad product. I own a version of both types of products.

AND you don't want to take advice about life insurance from someone who clearly spent their career selling car and homeowners insurance.
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What is the difference between whole life insurance and...

New postby Gail » 25 Oct 2009, 16:08

What is the difference between whole life insurance and term life insurance? What is the difference between whole life insurance and term life insurance?
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New postby Kasey » 25 Oct 2009, 16:08

There are a number of differences between the two types of policies. The simplest way of looking at it is that term is like renting and whole life, or permanent, insurance is like owning.

Term insurance provides you with typically the lowest priced insurance product because the only accept the risk that you will die before reaching a specified date. If you do die during that time then the insurance company pays the established death benefit. If you out live the policy, you will typically not receive anything back.

With whole life insurance, you are paying the insurance company to provide your family with the insurance pay out when you die. Whole life insurance will usually last until at least age 100, regardless of when you begin the policy. There are some variations of whole life which also allow you to finish paying on the policy at a specified age, or after a set time period, but in these cases, the policy lives on even though you are no longer paying for it.
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What is the difference between Whole Life and Term Life...

New postby Nathanael » 25 Oct 2009, 16:08

What is the difference between Whole Life and Term Life Insurance? What is the difference between Whole Life and Term Life Insurance?
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New postby Mark » 25 Oct 2009, 16:08

LOL I'm laughing at the justifiable claim Bob says, that means, YOU DIE.

Anyway. Whole life, the premium is set when you take the policy out. You pay that premium every year, for your WHOLE LIFE, and it doesn't change. As eventually you WILL DIE, and the odds are always in favor of the insurance company, you will end up paying a WAY LOT for whole life insurance, IF you keep it until you die.

Term life, the premium is set when you take it out, but only for a certain number of years. It's WAY cheaper than whole life, consider it "pure" insurance. When the term expires, you can renew it, but at a higher premium.

Term is cheaper, but expires (and can be renewed). Whole life never expires, but costs about 10X as much.

Which you pick, is going to depend on what your GOALS are.
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What is the difference between whole life insurance and...

New postby Colette » 25 Oct 2009, 16:08

What is the difference between whole life insurance and term life insurance? Which is better?
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New postby Shaunte » 25 Oct 2009, 16:08

That's like saying, what's better, apples or oranges?

BEFORE you buy life insurance, sit down, and write out what you want it to DO for you. You should have a GOAL, and an EXIT STRATEGY, just like any OTHER financial tool you use.

Then sit down with your local agent and see which tool fits your needs.

For MOST people, they want life insurance around when they have minor or college age children - as they get older and more financially secure, and the kids leave the nest, and the mortgage is paid off, and they start acquiring some real serious assets, they don't need the life insurance - so TERM life fits that need best, and is the most affordable type coverage.

But some people, especially those that own a family business (think, family farm!) need a policy to pay ESTATE TAXES so the family doesn't have to literally, sell the farm, in order to pay the estate taxes. It doesn't MATTER that you don't have kids any more. Or maybe, you're dying of cancer, and want to leave your grandkids $1,000,000 each, without Uncle Sam taking 40% in estate taxes FIRST. If you buy a WHOLE LIFE policy, even if it costs more than the $1,000,000, it WON'T cost as much as paying estate taxes will, and then you get to leave tax free benefits to someone.

So, just like everything else, you need to pick the right tool for the job. But you need to define the job, first.
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