“I’m trying to decide whether to purchase Term Life or Whole Life and can’t make up my mind. What is the biggest difference?”
The biggest difference is that a Whole Life policy actually earns you money over the life of the policy. Term Life won’t. When my parents had me and my siblings purchase Whole Life policies at age 17, I began paying premiums. The premium has been the same for X number of years and will remain the same for the life of the policy. What has happened though, is I’ve earned dividends on the policy and it’s cash value has grown with the growth of the company because of their investments.
The other nice benefit of owning a Whole Life policy is that over the years I’ve had things come up; I returned to school, had unforeseen expenses and needed to borrow money against my policy. I was able to take out loans against the cash value of my policy, that didn’t effect the death benefit. I have since paid back the loans because I don’t want to lose cash value, but in the end it wouldn’t have effected the death benefit. That money is still there when I need it.
Unlike Term Life, which can end up losing value if kept beyond its term, Whole Life is a permanent life insurance and it never loses its value, as long as I pay my premiums and keep the policy active. When I reach the age of 67, I will have had my policy for 50 years, my premiums will remain the same for all those years and I will have paid off the policy. The cash value will have grown and I can keep it as a death benefit, borrow part or all of the cash value to use for my retirement, or help pay for my children’s college.
Whole Life policies have been around for a long time, and have proven time and time again to be a good way to invest over the long term in life insurance. Call an AC Financial adviser at 800-564-3136 to talk about optional riders for Whole Life for Critical Illness, Disability Monthly Income and Value Enhancement Riders, among others.