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Term vs. Whole Life Insurance? whats a clear difference between both of them?

Public Comments

1. Don't even think about it. Get term. Whole life only makes the person selling it to you rich. /
2. Term is pure insurance, for a set period of time. Whole life, never expires (which means you pay into it a lot longer) and it has a gimicky savings account attached to it. It costs a way WAY lot more than term life.
3. Term is like car insurance. If you use it the insurance company pays someone. If you don't use it you live. Either way someone wins. And hopefully you never have to use the insurance. Term is cheap. Get level premiums for 20 or 30 years.
4. I'm seeing the same old tired, ignorant mantras: "It's expensive," "It's a ripoff," "term's cheaper," etc. Each and every type of life insurance product that exists is the best, most cost effective alternative for someone in a particular situation, so anyone who opens the discussion by stating that one type is "better" or "cheaper" than another has just disqualified himself from the conversation. The secret is to consult with a properly qualified financial planner or advisor, not an insurance salesperson. BTW, in response to mbrcatz' comment, I'm 48 and bought a whole life policy at age 30. I paid into into it for eight years and stopped. I illustrated the policy out using very modest interest and dividend rates, and it is likely that the policy will remain in force for my entire life without dropping another penny of premium into it. Even if it were to hold out only another 20 years, I'd be FAR ahead of any term policy. Also, no insurance product has a "gimmicky savings account" attached to it. Anyone who says this has no clue about the purpose of cash values in a life insurance policy. Further evidence that insurance salespeople are not qualified to offer life insurance. ADDED: @Mr Prefect: "Sorry Pickle but no insurance plan will get you or anyone a 40% return." I'm not sure what you're getting at. Pickle was referring to the policy's cash value being 40% of the death benefit. In a typical whole life policy, the least efficient type of permanent coverage, this happens in about the 30th policy year for a policy taken out by a 30-year old male. In fact, shortly thereafter, the cash values will normally exceed premiums paid. "Who needs to spend up to 9 times as much per year for whole life that in the ends nets you the same amount." If you want to "buy term and invest the difference," there is no place more efficient to do that than inside a VUL policy. Term policies are temporary insurance for temporary needs. Unless you die, they "net" you a loss. In other words, with term insurance, you HOPE to lose your money. With permanent policies applied to the proper scenario, you can never lose. Finally, thanks Pickle for some good insight, especially pointing out that Judy should probably keep her poorly-founded opinions to herself on this topic.
5. Judy should refrain from answering. If you want insurance forever get whole life (or some version that will last forever...guaranteed universal life, etc..). Term insurance only lasts (essentially) for the length of time that the premium is guaranteed. In other words getting a 30 year term makes no sense to a 20 year old if they want coverage when they're 65 years old. I'm not a big advocate of whole life insurance, but anyone that tells you not to do it without knowing any facts shouldn't be sharing their uneducated opinion. The 'gimmicky savings account' is to offset the cost of the insurance so that the plan lasts forever. When your $1,000,000 has $400,000 of cash you're only buying/paying for $600,000 of insurance.
6. Sorry Pickle but no insurance plan will get you or anyone a 40% return. Consider term basically for the savings. Who needs to spend up to 9 times as much per year for whole life that in the ends nets you the same amount.
7. There are a lot of opinions on the subject. Keep in mind that when dealing with financial matters, there are several opinions. Some people clearly dislike whole life insurance and even go a bit over board in their opinion. Personally, i prefer term. Educate yourself, take your time and make an informed well reasoned decision. The following article explains the differences between whole and term conceptually. Do you have an opinion on the matter yet? Good Luck!