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Regarding Life Insurance, What Is The Difference In "whole Life" And A "term Life" Policy?

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Regarding Life Insurance, What Is The Difference In "whole Life" And A "term Life" Policy?

Postby Aminon » Mon Oct 06, 2014 12:08 pm

In a nutshell, a Whole-Life policy is one that you own, earns you a return and is in force for the entirety of your life. A Term Life policy is one that is set up for a defined number of years, usually 10, 20 or 30 years and it expires at the end of the term. Most Term Life policies are ?level term? meaning that the premium will be the same throughout the duration of the policy. The pros and cons of each, and then the myriad of variables available could fill volumes. You have your work cut out for you.   BearHawk 44 months ago
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Regarding Life Insurance, What Is The Difference In "whole Life" And A "term Life" Policy?

Postby Boden » Mon Oct 06, 2014 12:25 pm

All life insurance is term insurance. Whole Life is really level term insurance priced to age 98, 100, 110 etc. It has a cash value and usually has dividends. Most of the time you can stop premium payments after a number of years and the policy will support itself by internal dividends paying the premium. Premiums are higher than term because it is priced to be level premium over 40 or 50 years instead of 10 or 20 years.Term insurance is designed for 10, 20, or 30 years. It has no cash value. There is now a product on the market called return of premium term. If you keep the policy for a certain number of years, you get all your premiums back. The premium is level and can be, in most instances, renewed for another 10 or 20 years. There is also a one year renewal term policy where the premium increases each year. This is usually used for short term needs like a short business loans. It is also a great way to start an insurance program for a young family. Since most term policies are convertible to Whole Life or Universal Life, you can make adjustments as family circumstances change.The cash value of a whole life policy can be borrowed tax free, but if you surrender the policy with an outstanding loan, the money in excess of premiums paid is subject to tax. This borrowing feature is great for emergencies. Unfortunately, most people start borrowing the cash value just like they take loans from their 401(k)'s. It then defeats the purpose of the policy and could cause it to lapse in later years.Whole Life insurance is designed to be income replacement insurance during your earning years and asset insurance during retirement. This means, with insurance in force, you can spend down your retirement dollars, and still have insurance to take care of your family if something should happen. If you should die during your earning years, the money will replace lost income to the family.Permanent insurance is not an investment. There are many in the market place that try to compare permanent insurance to an investment. You can not do this. Insurance was never meant to be an investment. It has a savings component, but that should not be compared to any investment.If not used correctly, term insurance can be the most expensive insurance you can buy because of all the lost opportunity costs involved. Just like auto and homeowners insurance, you can pay premiums all your life and never have a claim.As mentioned, the combinations are numerous. You really need to look at your specific situation and decide what is best for you.   WEALTHADVISOR 44 months ago
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Regarding Life Insurance, What Is The Difference In "whole Life" And A "term Life" Policy?

Postby Murrough » Mon Oct 06, 2014 1:36 pm

Whole Life is definitely better. Think of it long term as loose change. Twenty or thirty years from now it'll come in handy when you're ready to retire.   rhine44 44 months ago
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Regarding Life Insurance, What Is The Difference In "whole Life" And A "term Life" Policy?

Postby Acher » Mon Oct 06, 2014 4:12 pm

Thanks!   newbie6308446 44 months ago
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Regarding Life Insurance, What Is The Difference In "whole Life" And A "term Life" Policy?

Postby Medyr » Mon Oct 06, 2014 5:57 pm

Thanks!   newbie6308446 44 months ago
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