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Life Insurance: Variable Life vs Whole Life, which one is really better?

Is Whole Life premium more money than Variable Universal Life? I asked for a Whole Life insurance quote from one of the big insurance companies around, instead the agent tries to convince me that I should go with Variable Universal Life. He said Whole Life premium is always higher than Variable Life. He generated a printout for Variable Universal Life but not for Whole Life. I just want my premium to remain fixed in my old age and dont want the death benefit to fluctuate hence I prefer Whole Life. He stated that the death benefit is guaranteed for VUL. Is it really? I have a feeling it's not and that the premium for VUL will increase in my old age since it's dependent on my market investment. I'm beginning to think that his commission for selling Variable Life is more than selling Whole Life. I'm 37 female, non-smoker, in good health. I dont believe Whole Life premium would be that much higher than VUL. Any input is appreciated.

Public Comments

1. If death benefit is the most important criteria for you and wants fixed lowest premium. Go for 30 year term. Term beats everything hands down in insurance domain. Your agent will get about 80% of first year's premium and 4% thereafter till policy remains in force. Variants of permanent life is NOT profitable for clients. They are more like fixed income instruments than anything else. However, if you want to introduce a fixed income instrument in your portfolio buy dividend based whole life. The way to do it would be to buy lowest possible death benefits in whole life usually $10,000. That would mean $100 per year premium. Then you pay additional money into it by buying paid-up riders or smthg. That extra money goes to your bottomline irrespective of agent's commssion. Your agent will go mad if you tell him this arrangement. He will make less than a term life if you do it. I recently did the same thing. Bought a fixed term for 30 years and bought a $10,000 whole life and will be tacking on addional money as I see fit. Dont pay any money to freaking agent.... Good Luck!!!
2. What's the GOAL of the insurance? With VUL, you get "market risk returns", which means POTENTIALLY, maybe your premiums will go down. Maybe they'll flat out go away, and you'll still have the insurance. And maybe, some day after years of no premiums, you'll have to start paying them again. If you want a guaranteed fixed premium, then yes, you want whole life. The death benefits ARE guaranteed in VUL, it's just the PREMIUMS that fluctuate. And sometimes, the death benefit can be INCREASED. I'd strongly suggest that you call another agent or three, and talk to them about getting MULTIPLE quotes from MULTIPLE companies. Keep a spreadsheet with the company name, and product name, so you can compare them. Also, I'd STRONGLY suggest you write down what the GOAL of the insurance is. For most people, you come out WAY ahead by buying a long term term insurance policy - like 20 years - and investing the difference between the term and whole premiums in a schwab account. So yes, after 20 years your term policy vanishes - but your Schwab account has as much, or more, money in it than the death benefit was, so you are now "self insured". DO THE MATH. http://www.msfinancialsavvy.com/calculators/monthly_deposit_savings_calculator.php
3. Neither. If you're just concerned about keeping life insurance around forever and you want a level premium then look at a FIXED universal life with a premium guarantee. I have a tool on my site that quotes the companies that offer these products. It's referred to as "to age 100." If you don't need cash value then neither of the products you mention seem appropriate. In these products the cash value isn't guaranteed but the premium is so you'll know as long as you pay you'll always have coverage. Paying extra for cash value seems pointless if that's not part of your goal.
4. The gentleman above me hit the nail on the head. I just want to point out that the agent would be making LESS on a VUL than WL for the same death benefit. However, the way it was explained to you/how you comprehended it was wrong. I would find another agent if I were you.
5. The death benefit is gauranteed with a VUL, however the premium is not. The premiums and investment returns are based on market flucuations and therefore they can go way up or way down. They they go up, the difference is typically taken from the cash value. Typically the premiums are a little higher on Whole Life than VUL but not by a lot. The only time a VUL is beneficial in my opinion is if you are wealthy and looking to use it as a tax shelter. If you want your premiums to be gauranteed, go with Whole Life. That's the only insurance available where your premiums will never change. If you aren't on a tight budget, take a look at a Limited Pay policy where oyu pay a little more, but it is completely paid up in 10-20 years rather than paying your whole life. Considering your age this will work out cheaper in the long run if you live past age 60 or so, which is fairly likely these days. If you're concerned about your agent selling for commissions rather than what is right for you, shop around. Talk to a couple brokers. If they all come back and say that VUL's are the best suit for you, then maybe he's legit. I know with my company VUL's and WL pay the same commission %, so it doesn't make a difference, but every company is different I suppose.
6. Whole life insurance policies are generally more expensive than universal life policies. I sell both. I do not sell variable life products, I sell fixed universal products. Riders can be added to create a guarantee payout but it is more expensive. Universal life is dependent on the rate of return on a fixed interest rate or on a variable rate. Variable rate policies have more risk but also more rewards. For example, a preferred non-smoker female can get a universal life policy for $100,000 at $67.65 per month. Our policies are different because they also pay living benefits. if you become critically, chronically, or terminally ill, my company will pay YOU while you are alive. barry33781@yahoo.com
7. Personally, I believe neither one is good for anyone who wants life insurance. For one, they are both very expensive. An average 30 year old pays $1000/year for $100,000 coverage. Here's a break down of whole life and universal life. You will see how both of these life insurance are horrible products, especially variable universal life. Whole life: 1) Level premiums until the policy expires when you are at age 100 or when you die, which ever is earlier. If you live to age 100, the company will pay face amount of the policy to you. 2) In first 2 years, all premiums goes toward the insurance company, which most of will be paid to agent's commissions. 3) After the first 2 years, a portion of your premiums goes to the insurance company and the rest into the cash value. 4) Cash value typically accumulate annual interest of around 3%. 5) If someday you want to take money out, you can borrow it and pay loan interest of 8%. If you die someday while there's a loan due, the loan amount plus interest will be deducted from the face amount of the policy. If you cancel the policy while there's a loan balance, you will be responsible for income taxes on the loan. 6) If you die someday, the company will pay the face amount (minus any loans, loan interest, and missed premiums) to your beneficiary. All the cash value goes to the insurance company. Variable Universal Life 1) You are typically given 2 ranges of premium you can pay. One of them is called "minimum premium." Before I said an average 30 year old would pay $1000/year for $100,000 coverage. The minimum premium would be much lower. It will probably say $500/year. The other is called "target premium" The premium would be about the same or higher, so it will say about $1000/year. 2) Premium payments are flexible. You maybe able to skip premiums as long as there is enough cash value to support the "minimum premium." 3) Your premiums are paid for 3 things: The insurance, the cash value, and administrative fees 4) Your cash value is invested in select portfolios, therefore it is not guaranteed. The average rate of return of your cash value will always be less than the investment portfolio's rate of return. Why? Its because investments have their own annual fees and so does the insurance company. So you are paying bunch of unknown fees that eats away the actual return on your investments. For example, a mutual fund may get an average return of 8% in a 10 year period. But your cash value would get maybe 4-5% return. 5) While premiums remain about the same in the beginning, the internal cost of your insurance goes up every year. That means less and less of your premiums goes toward the cash value. Eventually, all your premiums is going toward the insurance and after that, your premiums will go up. If you don't pay the higher premium, then the cash value will be used to pay for it. If the cash value is about to be depleted, will get a letter saying you are in danger of having the policy lapse if you don't pay a certain amount of premiums. 6) At the time you apply for this life insurance, you are given two death benefit options. Option 1 or Option A will either pay the death benefit or the cash value, but not both. Option 2 or Option B will pay the death benefit and cash value for an extra added cost to your premium. Most people switch from Option 2 to Option 1 because the cost of having this insurance becomes too great in the future. 7) As with whole life, same borrowing features. You can borrow it and pay loan interest on it. As you can see, both of these types of life insurance are horrible products. I personally believe that no one needs life insurance for their entire life. The only reasons why someone would consider getting life insurance is 1) They don't have enough savings AND/OR 2) They have kids dependent on his/her income AND/OR 3) They have debts to pay. Therefore life insurance should only be used to replace your income in the event that you die. So I recommend everyone to buy term insurance and put their savings somewhere else such as bank accounts, Roth or Traditional IRAs, retirement plans at work such as 401(k), and other areas besides life insurance. Term insurance does not build cash value. Therefore you can get lots of coverage you need for low amount of premiums. Some may argue that it will get more expensive when it is time to renew. While that is true, you should put together a plan so that you don't need life insurance forever. I think 20 year level term is long enough for most people. If not, a 30 year level term. Lets say you got a 30 year level term and pay about $600/year for $500,0000 coverage. And you invest $400/month into a Roth IRA for the next 30 years. The investments I own have an average rate of return of 12% in the past 30 years. To be conservative, lets say you get a 8% return in the next 30 years. In 30 years, you will have about $600k saved for retirement. If you get 12%, it will be $1.4 million. Since this