Term Life Insurance vs. Whole Life Insurance continues as one of the longest running debates in the financial planning and insurance worlds. Simplyinsurance.co and J.C. Matthews recently published: Term Life Vs Whole Life: Advice From 40 Personal Finance Experts That Will Blow Your Mind (Spring 2017). Simplyinsurance.com asked over 100 personal financial experts and blogger the question: “Term life vs Whole life, which would you choose and why?” The results were: Term (34), Whole Life (2) and Neutral (4). Read the article and see for yourself. Here’s my answer:
My vote is for term insurance.
Why? The reason for any insurance is to protect against a specific need.
Most people have a need for a specific period of time such as until kids graduate from college, a mortgage is paid off or until they retire.
As term policies come with different guaranteed level premium periods, it is easy to match the need with the coverage amount.
If we are doing retirement planning, will have other assets to offset any need for life insurance.
If someone does have a permanent need, which is a small percentage of the time, a guaranteed universal life policy which functions as a life long guaranteed premium term policy makes sense as it will have a lower premium than a whole life policies.
Whole life policies do accumulate a cash value on a tax-deferred basis, however, the net rate of return is low when compared to a balanced investment portfolio and the insurance cost, expenses and method of determining the dividend scale/interest rate are not disclosed.
You can also learn more on The Whole Life Rebellion page.