Whole Life Insurance
You need life insurance if you want to provide financially for a loved one when you die. While there are arguments on both sides as to when you should buy life insurance, we believe you should apply for life insurance at the youngest age possible. This allows you to lock in a premium at the youngest age possible.
Virtually every one will need life insurance at some point in their life. Why not apply when you are in the best health and the youngest age (to lock a rate in)? Life insurance premiums will increase as you age if you wait to apply. This increases the odds of possible health issues, causing you to pay higher premiums or even be declined.
In addition, Whole Life insurance potentially allows you to "pay up" your policy. This means that at some point in the future the insurance company may project enough current and future dividends and cash value to allow you to stop paying premiums while still keeping your policy active. Who would like to enter their retirement years with a life policy that does not require any premiums to be paid? We all would.
Whole Life is one of the oldest types of life insurance and is widely considered the Cadillac of policies. We believe you should buy the most Whole Life you can afford. Beyond that, buy term insurance for the rest.
If Term is cheaper, why not just buy all Term Insurance?
Term insurance is cheaper when you are younger, but much more expensive in your older years. Most Term Insurance also expires after age 75 and does not pay any cash back after all those years. Term pays the death benefit to your family when you die. If you live to age 75, it simply expires. But more than likely you will not carry term into retirement as the premiums increase dramatically during that time. If you want life insurance in your senior years, you need Whole Life. The real value to Term Life Insurance lies in its ability to provide you a lot more coverage throughout your 30's, 40's and 50's while you are paying down a mortgage and raising kids.
Can I buy a combination of Term and Whole Life?
Absolutely. It is a great idea. Term allows you to provide the larger overall coverage you need while younger and usually have more at stake (mortgage, younger children and usually more debt). Whole Life supplements Term but also ensures you will have life insurance into your retirement years.
Term - lower premiums when you are younger. Higher premiums when you are older. Policies expire after age 75, usually. Most Term policies never refund any money and premiums usually increase as you age. There are "refund of premium" term insurance but we advise against buying those. They charge an extra premium for that feature, money you would be better off putting into a 401k or IRA.
Whole Life - level premiums for life. Premiums lock in at whatever age you apply for the rest of your life. Builds cash value and accumulates dividends, which can increase your death benefit even more. Whole Life is the best life insurance available.
