Whole Life Insurance vs. Term Life Insurance – Which is Better?

Hi everyone, my name is Kevin Boland and welcome to my insurance website. In this video I will talk about Whole Life Insurance or Universal Life Insurance.   

A Whole Life Insurance policy is a permanent policy. This means as long as you pay the monthly premiums the policy remains in force. So one day when you pass, your family gets a nice check to pay your final expenses and to provide income for those you leave behind. A Whole Life policy can also earn you a return or give you back most, if not all of the money you put into it. This is possible because the insurance carrier will pay you a return. That return can be based upon current interest rates, or based upon other methods, such as linking your return to US Stock Indexes. 

How many people like giving away their money and never seeing it return? Whoops! Term Life Insurance is great because it’s inexpensive for a whole lot of coverage. But, once the term ends, so does you coverage, and you get none of your money back.

So many young couples will ask me for a Whole Life Insurance policy because they like building cash value, perhaps to have that money available to take a vacation, remodel their home, or pay for school expenses.   

Other Types of Life Policies

The other types of policies are called Indexed Universal life Insurance or Variable Universal Life Insurance. These are Whole Life Insurance policies which offer different methods to earn a return of your money.

I often put together these types of Whole Life Insurance policies for clients who like getting a return on their investments. Farmers offers a Indexed life Insurance policy that links your return to the S&P 500 Stock Index or the Russel 2000. When these indexes go up, Farmers credits your policy with a return up to about 10%. When these indexes go down, your principal money is safe, it does not go down. This is one of our most popular Whole Life Insurance policies today.

Farmers Variable Life Insurance policy invests your money into what are called sub accounts through solid mutual fund companies such as Fidelity or American Funds. When these funds go up so does your money. When they go down though, so do does you investment. My clients, who invest in the market, like our Variable Life policy because they understand that the stock market has volatility, but over time it has proven to offer a great return.  

Another big benefit of our Indexed or Universal Life policies is for clients who have maxed out their IRAs. They like putting their investment dollars in their whole life policy as the money grows tax deferred. It’s a smart way that they can save more money for retirement.

Which Life Insurance Policy is Right for You? Or is a Combination?

If your budget allows you to contribute $100 or more each month then Whole Life Insurance can offer you a return on your money. If you’re budget is super tight, then Term Life Insurance is a wise choice. Often I put together a combination of Term Life Insurance and Whole Life Insurance because when couples have young children, they need a lot of financial coverage and the Term policy protects them. But, later in life, they like getting a return of their money. Then a Whole Life policy can help them accomplish this goal! 

I think that is all the time we have today. My young daughter, who is my producer, is giving me the wrap up signal.   I hope this video was helpful. Remember when you get married. Or buy your first home. Or that first bundle of joy is on the way. Call us. You want to leave behind a strong financial legacy for those you love. Help them navigate life’s future financial waters without you. 

Be smart and get a life policy.

Thank you for listening today and I hope my advice on Whole Life or Universal Life Insurance helps you down the road.

Please also see this blog post video on qualifying for discounts on your insurance.