There is a perennial debate about whole, universal, variable life insurance and term insurance. Originally there was only one type of insurance, Term Insurance. But some heads got put together and decided that as agents it would be nice to be able to earn more money from their customers. Voila! Whole life insurance was born.
Just imagine if you wanted car insurance on your car and your agent said, well we have a Basic Plan, or a Premium Plan. If you purchase the Basic plan your car will be covered but all you do is pay out money and hopefully never have to get your money back by having an accident.
But our Premium Plan allows you to save money towards your retirement! Doesn’t that sound good?
Well it may sound good to the ignorant, but not to the wise!
Financial Experts like Dave Ramsey say “Never buy whole life insurance!”
You may think “Why not?” That is if you actually do think beyond what some hyper salesman tells you!
The Fool Recommends Term Life Insurance
Never Buy Whole Life Insurance* – Why?
- It will cost you a lot more money than term insurance which is more affordable
- The so-called savings is NOT A SAVINGS TO YOU! It is a savings to the life insurance company! When the insured dies, the savings is taken by the insurance company to pay off the face value of the policy!
- But you have been told you can borrow from it, right? Right! So if it was YOUR SAVINGS, why do you have to borrow it??? When you put money in a savings account in the bank and you want to use some of it, do you have to “borrow” it from bank??? Of course not! YOU ALREADY OWN IT! You can do what you want with it!
- But since you have to buy life insurance anyway, isn’t it just as good to have a little extra savings? I emphasize “a LITTLE extra savings” because the rate is so low that even if it was your savings, you would be better off investing the money conservatively since you would earn a lot more than “a little”!
All financial experts who are not tied to insurance companies in some way agree that TERM LIFE INSURANCE is cheaper, more affordable and with the savings from NOT BUYING a whole life plan, you will be able to invest and use that money to make money that actually belongs to you and that you will be able to use it in whatever way you want!
Dave Ramsey is probably the best known current financial expert.
Here are some videos to explain why Term Life Insurance is the way to go!
Dave Ramsey Explaining Why
Term Insurance is the Best!
90 Second Finance Explains Why Buy Term?
Dave Ramsey and a Whole Life Agent Duke it Out
The article in Consumer Reports starts off like this:
How to protect yourself
If you’re shopping for a policy:
As we’ve long advised for most consumers, buy term life rather than a cash-value or whole life policy.
Whatever you buy—term, cash-value life, or annuities—sign only with an insurer that has earned the very top financial-strength rating from an independent rater. That would be the A ratings tier at TheStreet.com, available to consumers free, as well as the AAAq grade at Fitch and the AAApi grade at S&P.
To further diversify, buy coverage within your state’s guaranty association limit from separate companies—for example, a $300,000 death-benefit policy or $100,000 cash-surrender-value policy from Company A, and additional, similar-value policies from Companies B, C, etc. But the added safety of multiple policies might cost you a higher combined premium than you might pay with a single policy.
Editor’s Note: It continues but you have to be a subscriber to see it all. And by the way for WE CANADIANS, how can you beat $39.95 for one year of issues, plus the FREE Buying Guide that sums up the latest ratings in almost any area you can think of….
It is like somebody offered you the chance to save hundreds if not thousands of dollars for only $39.95 a year!