Term Life vs Whole Life insurance – Why Term Life Insurance Is Best If You’re Under 60
Despite what life insurance agents may have told you, the only type of insurance you will ever really need is term life insurance. It doesn’t matter if you’re living in the United Kingdom, the United States or India. The whole business of life insurance is the same throughout the world.
But before we tell you the why term life insurance is more valuable, it’s important to understand how different it is from whole life insurance.
The basic difference between term life insurance and whole life insurance is this: A term policy is pure life coverage only. When the insured person dies, the insurance policy pays the death benefit to the named beneficiary. Term life insurance varies from one year to 30 years.
Whole life insurance, on the other hand, combines a term policy with an investment component. The investment could be in bonds and money-market instruments or stocks. Over time, the policy builds cash value that you can loan against. The three most common types of whole life insurance are traditional whole life policies, universal life insurance and variable life insurance.
Whole Life Insurance: Do Not Expect High Returns on the Investment Part
Whole life insurance is expensive: You’re paying not only for insurance but also for the investment portion. That extra cost would have been worth it if these policies were a good investment vehicle. But usually they aren’t. And that’s why insurance agents like to call them retirement plans, emphasizing “forced savings” instead of “good investment.”
Apart from the fact that there are many better ways to save for retirement, whole life insurance policies come with high fees and commissions, which sometimes lop off as much as (3) three percentage points from the annual return. On top of that, there are up-front (but hidden) commissions, typically 100% of your first year’s premium. Worse, it’s often impossible to tell what the return on the investment will be, and how much of what you pay goes toward the insurance and how much toward the investment.
Term Life Insurance: Where the Value Is
To get a real sense of the value of term life insurance, let’s compare a term policy and a universal life policy.
Say a 40-year-old nonsmoking male has a choice between a $250,000 Met Life universal policy with a $3,000 annual premium, and renewable term life coverage with a 20-year fixed premium of $350 for the same coverage amount.
At the end of one year, the whole life universal policy, assuming it paid 5.7% per year, tax-deferred, would have a cash value of exactly zero (cash value is the amount you would get back if you canceled the policy). But say he had instead invested $2,650 (the difference between $3,000 and $350) in a no-load mutual fund that averaged a total return of 10% annually. At the end of the first year, he’d have $2,841, accounting for taxes on the earnings at a 28% rate. At the end of 10 years, he would have accumulated more than $46,000 in after-tax savings in the mutual fund. Over the same period, the cash value of the policy would have climbed only to $31,819. That’s a whopping $14,181 dollar difference in investment returns.
James Hunt, actuary for the Consumer Federation of America, who has analyzed thousands of policies, notes that whole life policies hardly ever yield a reasonable return unless held for 20 years or more. So if you buy one, be prepared to pay long into the future.
Caveat on Term Life
That’s not to say that whole life insurance is always a bad idea. Wealthy people can use whole life in their estate planning by setting up an insurance trust that will pay their estate taxes from the proceeds of the policy.
Also, if you’re starting a family in your late 40s or 50s, whole life insurance is at least worth considering.
Premiums for term insurance are only downright cheap for healthy people up to 50 years old. After that age, the premiums start to get progressively more expensive. Also, beyond 60 years old, you may have no alternative but to buy whole life insurance. Most companies simply won’t sell term life insurance to people over 65 years old.
████████►BUY VIAGRA◀███████…
████████▲▲▲▲▲▲▲▲▲████████…
████████►BUY LEVITRA◀███████…
▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲▲…
Accupril…
Buygeneric drugs…
Abilify…
Buygeneric pills…
……
Buygeneric meds…
Actos@official.site” rel=”nofollow”>..…
Buywithout prescription…
Aleve@official.site” rel=”nofollow”>..…
Buyit now…
fruite@of.the.earth.aloe.vera.juice.sale” rel=”nofollow”>……
Buynow…
altace@medication.now” rel=”nofollow”>……
Buygeneric meds…
tylenol zyrtec recall…
Buyno prescription…
abilify@vs.risperidone.dosage” rel=”nofollow”>.…
Buygeneric drugs…
buy@cheap.viagra.in.uk” rel=”nofollow”>.…
Buywithout prescription…
buy@viagra.in.london.england” rel=”nofollow”>……
Buygeneric drugs…
< a href="http://my.gardenguides.com/members/buy-Tramadol? buy@Tramadol.now…
Buyno prescription…
prozac@dangers.now” rel=”nofollow”>..…
Buygeneric drugs…
Zyrtec@official.site” rel=”nofollow”>.…
Buynow…
Depakote@official.site” rel=”nofollow”>.…
Buygeneric drugs…
zyban pill…
Buywithout prescription…
buy zithromax online…
Buyno prescription…
buy zinc anode everett wa…
Buygeneric meds…
Zetia…
Buyno prescription…
diovan…
Buyit now…
zantac infant…
Buyit now…
zyrtec benadryl…
Buyit now…
Zoloft…
Buygeneric drugs…
asperger zoloft 100…
Buydrugs without prescription…
Vitamin B…
Buynow it…
where to buy lamisil…
Buygeneric drugs…
weight loss with topamax in gainesville florida…
Buynow…
pharmacokinetics of zyrtec…
Buyit now…
purim wiki…
Buydrugs without prescription…
arthritis orlistat…
Buyno prescription…
Omnicef…
Buynow it…
negative side effects of seroquel…
Buygeneric drugs…
Rogaine…
Buygeneric meds…
Synthroid…
Buygeneric pills…
Retin A…
Buywithout prescription…
Remeron…
Buyno prescription…
Purim…
Buyno prescription…
purim suddah…
Buygeneric meds…
depo provera shot how young can you be to take it…
Buyno prescription…
can i take expired zyrtec…
Buygeneric drugs…
lamictal with pamelor…
Buygeneric pills…
savella diabetes blood sugar…
Buygeneric drugs…
Paxil…
Buygeneric drugs…
Pulmicort@Pulmicort.Pulmicort” rel=”nofollow”>.…
Buynow it…
Purim@Purim.Purim” rel=”nofollow”>……
Buyno prescription…
Synthroid@Synthroid.Synthroid” rel=”nofollow”>..…
Buynow it…
Purim@Purim.Purim” rel=”nofollow”>..…
Buynow…
Slimfast@Slimfast.Slimfast” rel=”nofollow”>..…
Buygeneric drugs…
Synthroid@Synthroid.Synthroid” rel=”nofollow”>..…
Buynow it…
symbicort@official.us.website” rel=”nofollow”>……
Buygeneric drugs…
Spiriva@Spiriva.Spiriva” rel=”nofollow”>..…
Buyno prescription…
Synthroid@Synthroid.Synthroid” rel=”nofollow”>.…
Buyit now…
Crestor@Crestor.Crestor” rel=”nofollow”>……
Buyno prescription…
Coumadin@Coumadin.Coumadin” rel=”nofollow”>.…
Buyno prescription…
Prozac@Prozac.Prozac” rel=”nofollow”>.…
Buygeneric drugs…
Synthroid@Synthroid.Synthroid” rel=”nofollow”>.…
Buynow…
Seroquel@Seroquel.Seroquel” rel=”nofollow”>..…
Buywithout prescription…
.…
Buygeneric drugs…
……
Buygeneric meds…
..…
Buywithout prescription…
.…
Buygeneric pills…
pyridium@can.cause.low.blood.sugar” rel=”nofollow”>.…
Buygeneric drugs…
what@side.effects.does.abilify.cause” rel=”nofollow”>……
Buygeneric meds…
chantix@vs.zyban” rel=”nofollow”>..…
Buyit now…
reglan@black.box” rel=”nofollow”>……
Buydrugs without prescription…
cipro@causes.problems” rel=”nofollow”>.…
Buygeneric drugs…
retin@a.cheap.no.prescription” rel=”nofollow”>..…
Buygeneric drugs…
cymbalta@20.mg” rel=”nofollow”>……
Buygeneric drugs…
high@dose.dexamethasone.induction” rel=”nofollow”>..…
Buydrugs without prescription…
aleve@active.ingredient” rel=”nofollow”>.…
Buygeneric meds…
dilantin@hypoglycemia.alcohol” rel=”nofollow”>……
Buyit now…
order@altace.cod” rel=”nofollow”>..…
Buynow…
……
Buydrugs without prescription…
otc@nasonex.alternative” rel=”nofollow”>……
Buynow…
is@neem.safe.to.use.on.skin” rel=”nofollow”>……
Buygeneric pills…
.…
Buynow…
dosage@of.abilify” rel=”nofollow”>..…
Buynow it…
premarin@cream.comments” rel=”nofollow”>……
Buyit now…
……
Buyno prescription…
..…
Buyit now…