how much for term life insurance? compared to whole life?

by hirby

The Term vs. Whole Life is an odd debate. Most people often recommend term and forget about all the details becuase they’ve read "Buy Term and invest the rest" so many times. Sadly, most people that Buy Term, don’t invest the rest and when they hit 50 years old they are now paying hundreds of dollars a month for insurance and have nothing for savings or they don’t have the disapline and knowledge to invest to ’self-insure’ themselves. Then when they hit age 75 or 80, if they are still paying the $500+ dollars a month (this in not an exaggeration…if you have term insurance check your policy…it will be at least that exprensive when you are older) for their term insurance, they are forced to bet $500 a month that they will die before age 80 or they get nothing. Buy Term and Invest the Rest is a good strategy in theory, but it’s a terrible strategy when you look at it from a practical standpoint. Most people don’t have the time or commitment to invest and get the returns that this strategy requires to make it work. Keep in mind…Whole Life was created becuase most people got hosed with Term insurance being either too expensive to pay for or it expired when you need it the most.

In reality, Term insurance should be used for a temporary need (making sure the kids will be taken care off, making sure the mortgage is paid off, etc.). The cost will start out small when you are young and after the term is over it will increase (IE: If you are buying 20 year term, at the end of 20 years you will have the option to renew it and a substantially higher price for another term). You build no cash value and it will expire ussually around age 80 (Average life expectancies are increases every year with advancements in medicine) if you haven’t died by then. Think of this like renting a house…it’s cheaper than buying one (whole life), but when you move out (cancel the insurance), you just hand back the keys and you get nothing in return.

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