What is the benefit of whole term life insurance vs. term?

Question

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

Answer 1

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

Answer 2

Someone didn't do a good job explaining your options if you are using the phrase "whole term life insurance".  Talk with at least 3 independent insurance brokers before you make a decision, but define your goals first so you don't get talked into anything - remember we're usually trying to sell you something.

edit: thumbs down for being a smart a$$ I'm sure.  What I'm saying is if you define your goals first (insurance amount, duration of coverage, guaranteed vs. non-guaranteed, company quality, and rough price range) and stay focused on them, you'll be able to collect the information you need to make a wiser decision and minimize the hassle of being sold something at the same time.  

There are good and bad ways to structure both term and whole life.  Each is appropriate in its own situations.  Jargon is just shorthand for people in the biz, but can sometimes distract shoppers from what is important to them when they consider protecting their family.

Sorry about the first sentence.  I only meant to point out an excessive emphasis on jargon.  It's like when I order a 12 oz. coffee and the barista says "Oh, you mean 'tall'?"  I tell them I don't care what they call it.

Answer 3

Use the tool on my site and instead of looking at whole life look at 'guaranteed to age 100' and compare that to term.

http://insurancepickle.com/life-insuranc...

The tool quotes ~150 different companies and asks for no personal information other than a date of birth.

The difference in premium is obvious.  If you buy a 30 year term insurance policy the insurance company only has to pay on the 'chance' that you'll die during that time frame.  Obviously if you take a 1000 people a certain percentage will die.  But, with a whole life insurance policy (in general terms of course) the insurance company WILL have to pay out on EVERYBODY....some sooner and some later (again..general terms).

So, it's not a matter of which is better, it's a matter of what you need.  Most people need some kind of permanent coverage to carry them into retirement...others don't.  There are man factors.  Step one is to figure out how much coverage you need.  Also, consider a return of premium term policy which gives you lower cost premiums like term insurance (since it doesn't put the company on the hook forever), but it gives you some options to continue a portion of the coverage beyond the time frame which makes it an excellent planning tool.

Answer 4

Term life insurance is the most popular and least expensive choice. Term is cheap for a reason: it´s designed to give you a sense of peace should an unforeseen death take place. Term is affordable even for younger families. Most term policies last twenty or thirty years, and if you die during the period covered by term life insurance, your spouse or child or designated beneficiary will get one big chunk of money. Most families use this one-time payment to pay off a mortgage, put away college money, and to give the surviving spouse enough money to give them time off work. In addition, term gives your loved ones money to pay for funeral and medical expenses. Term life insurance is cheaper than other policies because the premiums are never saved for you-your family only gets money if you die during the life insurance term.

Whole life insurance is another popular product. Under whole life insurance, a percentage of your premiums is put away into an investment for you and your family. You also are guaranteed a payout if you die during the term, but if you cancel the life insurance you get some of your investment back. With term life insurance, you never receive any money if you cancel the life insurance policy.

Whole life life insurance costs more than term, so keep this in mind when budgeting for life insurance products. There is a wide array of policies to choose from, both term and whole, so no matter what your budget, most families can find a solid life insurance product. In addition, policy holders can add on different features, such as illness and accident insurance. These products will increase premiums.

Mark Weiss

http://ezinsurance.com.au

Answer 5

Term life insurance is the most basic type of life insurance, and it only pays if the insured dies during the term of the policy. Whole life insurance, also known as permanent life insurance, is a type of life insurance that pays benefits whenever the insured dies, whether it is one day or seventy years from the date of purchase of the policy.