I can already hear whole life insurance zealots foaming at the mouth.
I can already hear whole life insurance zealots foaming at the mouth, waiting to shout things like, "whole life insurance offers great returns," and "it's much safer than the stock market." And I've heard it all before, but every scenario I have ever encountered where an individual has been paying on a whole life policy for an extended number of years, what they were told they would have accumulated by that point has never been even close to what they actually have. When I wrote about that elsewhere, the article generated this comment: "Whole life policies don't really start kicking in until retirement. Your clients that have those policies have usually just gotten past the insurance cost and won't see their cash value compound rapidly until they're 35 years in ... unless the policy was designed to do so." Did you catch that? This whole life enthusiast wants me to wait until I start seeing my cash value accrue. No thanks. Still wanting to believe that whole life insurance can make sense, I polled several other certified financial planners. Here's what they had to say. The Difference Between Term and Whole Life At its core, life insurance is about replacing a person's income in case of their untimely death. If you're only interested in income replacement, then term life insurance will generally suffice: You are insured for a certain period, generally 10 to 30 years. Whole life insurance (also known as permanent or universal life insurance) doesn't expire like term insurance does, unless you let your policy lapse. Whole life insurance is a great deal more expensive than term insurance. For that reason alone, individuals who earn less than $200,000 or so per year, according to certified financial planner Joshua Thompson, should stick to low-cost term life. Benefits of Whole Life Insurance
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