Define Whole Life Insurance. Whole Life vs Term Life Insurance?

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When I think of the word “insurance”, people have good and bad feelings.  There is a quote:

“In this world nothing can be said to be certain except death and taxes ~ Benjamin Franklin

I think if Benjamin Franklin were alive today, he would also include insurance.  Insurance is everywhere no matter who you are you have it.

WHOLE LIFE INSURANCE

Is a life insurance policy and is basically broken into two parts: Insurance and Investment?  First, there is the insurance part.  Essentially this the fixed or agreed upon amount of money that is paid to the person insured at the time of death.  Second it the investment part. 

This is the amount of money that accumulates or the “cash value” that the insured person can use as leverage to borrow against or money that they can withdraw.

Generally, the type of people who choose Whole Life Insurance are those “bread winners” who are wanting to leave a “nest egg” for their family when they die.  As well, some options in case they need access to money to pay unexpected debts and expenses.

Whole Life vs Life Term

The primary difference between these two, is there is no “Investment” component with the “Term Life.”  Term Life has some major differences from Whole life.  Whereas Whole life.

Offers coverage for the entire life of the insured person. Term Life only offers coverage for a “Temporary” period.  After that time expires, it is then up to the Insurance company if they will continue the “term policy” and for how much. 

Why do people choose “Term Life” instead of “Whole Life?”  Firstly, it is low cost; Secondly, there is usually higher cash payout at the time of death of the insured person.

Kin Hubbard once said: “Fun is like Insurance; the older you get the more it costs.”

Insurance is often best bought when you are younger and cheaper. 


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