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Rating of the Top Life Insurance Companies
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Peruse our Explanation and Learn to Define the Advantages/Points of Whole Life Insurance

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Nearly 40 percent of all Americans have no life insurance, and many of those who do have it have only Term policy which they mistakenly think will be renewed for as long as they live. The reason for the lack is simply that most people do not understand the difference between term and whole life insurance.

They purchased the term policy on the basis of price in comparison to the face value; the policy arrived in the mail. They put the policy in a drawer somewhere, began paying the premium, and simply never thought about it again.

Term Life and whole life do have a couple of things in common. They both have a level face value and a level premium—at least during the initial period of the term. Both have numerous riders that can be added. Both require medical underwriting for high face values, and both pay out a benefit if you die under the terms of the contract. There, however, the similarity ends.

The most obvious difference is in price—which, because it is initially dramatically cheaper than whole life, is about as far as the average shopper gets.  The more subtle and more important difference is that while Term life lasts for a set time period—after which the premium goes up steeply until the policy expires completely—whole life lasts for your “whole life.” Twenty years may seem far away when you purchase the Term, but the time comes all too quickly, and most retirees are either financially unable or physically unqualified to get the policy they might have preferred if they had known the facts.

  • Whole life builds cash value allowing you to surrender your policy for a refund if you later decide that you don’t need it. If you have paid a lot of excess into the policy, it is possible that you could be forced to pay tax on the interest gained, but this is not common.

  • Most policies have some paid up options allowing you to stop paying premium in exchange for a “paid up” policy of a lesser amount.

  • Whole life insurance is very reasonable priced if purchased while you are young.

  • A qualified agent is one who is not only licensed to sell the insurance, but who will take time to determine your needs and help you develop a plan for meeting them.

  • People with severe health conditions, who are overweight, or who are smokers can plan on paying more for whole life just as they would for Term life. However, if you can get whole life with a chronic health condition, you should get it while you have that opportunity. If your condition gets worse as you get older, you will find your options even more severely limited.

  • Never cancel an existing policy until a new one has been issued. Furthermore, examine both policies carefully to make sure the change is in your best interests.

  • Be careful that you don’t accidentally get modified whole life or a graded benefit. These types of policies are okay for the right person, but if you qualify for a standard policy, you will be unhappy with a rated one later on.

  • Stay up to date with your beneficiaries. If your beneficiary dies before you do, and you don’t change it on your policy, your heirs will find the money tied up for an excessive amount of time after you die. Also, the benefit will most likely have to go through probate.

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