Term Life Insurance Vs Whole Life

Roscoe · by **Roscoe** » 09 Sep 2009, 15:39

I am shopping for a decent life insurance policy. I have a question.

Say, if I go for whole life insurance through company A for 20 years and say if Company A goes bankrupt after 10 years.

Will I get my money back? What happens if I go for term life instead of whole life.
Thanks in advance

Kasey · by **Kasey** » 09 Sep 2009, 15:39

Lifeinsurance.awardspace.info - try this one. I have their insurance and, as remember, they can provide such a service.

Valda · by **Valda** » 09 Sep 2009, 15:39

The difference in the premiums is enourmous. Can the premiums be raised on either type?
whole vs term

Desire · by **Desire** » 09 Sep 2009, 15:39

Whole life is a scam. It offers no benefit over term combined with conservative investment of the difference in premiums.

Bettie · by **Bettie** » 09 Sep 2009, 15:39

So for all of you Insurance experts- I have some questions for you!

I understand more about term insurance than I do about whole life. I understand that if I qualify that I can get a Term life insurance policy for a certain amount - for a certain number of years.

BUT with Whole life do you pick your policy amount - say a million or 200,000? I've read it is like a bank account. But I don't understand it!

With term insurance you must qualify by doing their health exam every term and answer their questions every year right?!
But is it true that with whole life once you take the initial health exam then what? As long as you pay the premiums every month you are all good?

What worries me with the term life insurance is say I have a 20 year policy, but I find out that I have cancer during the 19th year they will not renew my policy right? But if I do have whole life then it does not matter because I am locked in as long as I pay my premiums, even though it's more expensive.

Krystle · by **Krystle** » 09 Sep 2009, 15:39

Whole life is like a bank account, where the bank takes 75% of what you put in. NOT a good savings/investment vehicle.

Yes, you pick your policy amount for both term and whole life. Yes, you have an exam at first, and no, you don't need an exam when your term is up, unless you want to try to get a lower rate. You can buy a term policy for up to 30 years a term. You can buy a "guaranteed renewable and convertable" endorsement on your term policy, which means you'll be able to renew when that term is up (usually 20 to 30 years) WITHOUT an exam. Or, you could convert it to whole life, WITHOUT an exam.

Term is cheaper. Don't be sold on gimicky savings/investments. Decide exactly what you want the policy to DO for you, and buy the product that DOES it.

Whole life, variable life, universal life, they make a LOT more commission for the agent, than term life. That's why so many agents like selling them.

Joan · by **Joan** » 09 Sep 2009, 15:40

What is the difference between term/whole life insurance vs accidental death insurance?

I'm trying to buy life insurance for myself and my mother. I read up on this survivorship insurance which sounded pretty good since I wanted something for my mother if I were do die first and vice versa. but most of the online quotes I saw were between spouses.

But I got confused when I read about accidental death ins- does this mean I will not be covered if I die of an illness or old age- but instead must die of an accident such as auto or slip and fall?

secondly, would I get taxed on the interest earned on the universal/whole ins or when the policy is paid out/ surrendered?

Philip · by **Philip** » 09 Sep 2009, 15:40

Correct. Term/whole life insurance covers you if you die, no matter what the cause. Accident only covers you if you die by accident - not murder, not old age, not cancer, not heart attack, not stroke. Not covered.

Universal life is tricky. Unless the interest is added to the face value for payout, it's not taxable when you claim it. And when you surrender the policy, it's only taxable if there's a GAIN - ie, you get back more than you pay out. Which is pretty rare.

Bottom line - insurance is good if you die. Investments are good if you live. And insurance isn't a good investment. It's a good PLANNING tool, but not a good wealth building tool.

Don't buy accidental death. Don't buy whole or universal. Buy term, invest the difference, and you'll be MUCH better off in the long run.

RUN THE NUMBERS. Do the math. The numbers speak for themselves.

Alaine · by **Alaine** » 09 Sep 2009, 15:40

People always ask about whole life vs. Term Insurance and the insurance salespeople always defend Whole life and trash Suze Orman (not a fan of her anyway). But they fail to prove the point with real hard numbers. Show me how Whole Life beats Term with the additional premium saved being invested in a Total Stock market index fund or other no load investment at a Vanguard or other low cost provider.
BTW - I understand it very well. Financial Analyst picked up on my point in his first sentence.
I meant Financial Answer Guy, see above.

Abbey · by **Abbey** » 09 Sep 2009, 15:40

Whole Life used to be how 'common people' saved for retirement. Whole Life is essentially a mutual fund investment that will pay you a big benefit if you die (big depending on whether or not you pay for big). Term Life insurance is a straight bet that you wont die. Term Life is significantly less expensive since you dont have to pay for a poor investment return.

I've never had an insurance person explain to me or show me how whole life is better than term -- which is why I have term.

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