Senior Housing and Assisted Living

In reality, there are few similarities between Term Life Insurance vs Whole Life Insurance other than they both pay out a death benefit. Term insurance is the newer type; whole life – also known as cash value and universal life – has been around since the late 1800s, although some of the basic tenets have changed and been updated over time.

The cheaper insurance is term. It’s so much cheaper because you are only buying the insurance. You aren’t paying high premiums that the insurance company is going to invest for you. You are also only paying for a period of time, or the term, and the insurance company is betting – in the truest sense of the word – that you won’t die during the term of the policy.

Term policies are very affordable as compared to whole life policies because with term, you are only paying for a death – or burial – benefit. Unlike whole life or cash value, you are not using your insurance policy as a form of savings or investment portfolio. A typical term policy is about 65% cheaper than the same policy purchased as whole life.

With term, however, if you survive the term of the policy, you don’t get any refunds as some people think. You pay your premiums, and both you and the insurance company are gambling that you don’t die. With whole life, your policy covers you for of course you whole life. The drawback is that you must keep paying premiums for the rest of your life, and if you took out your policy at an early age, you could actually be paying more than you should for a simple death benefit.

If you have a whole life policy, a major part of your premiums are used for your investment portion. The problem with this type of investment is that you only receive a tiny portion of any profits made from these investments. Your insurance agent will never tell you this, although it is clearly outlined (in small print of course) in the actual policy itself. If your agent is telling you that “your investment is assured to have a return of about 15% a year”, he’s probably right. What he doesn’t tell you, however, is you will only see about 3% – the insurance company keeps the rest!

If you have a term policy you will have the option of renewing at the end of the policy. Your renewal rate will be much cheaper than if you were start at that age and try to buy insurance. Usually the insurance companies don’t require extensive medical testing or anything like that.

Whole life payouts are confusing to the policy holders as well because when the policies are originally purchased, the insurance agent rarely explains to the person what happens when a claim is made. With this type of insurance, you only get the death benefit. So when you die, any “cash value” built up is not sent to your family. What happens to it? The company keeps it! Again, this is clearly stated in the policy but the carriers know that people don’t read these.

If you happen to borrow any of this money, by the way, your death benefit is decreased until you pay yourself back. With interest!

You can use the term life insurance calculator to find the best level of insurance today! When looking at term life insurance vs whole life insurance, a person will be able to see the benefits and advantages of each type of insurance instantly!