Critical illness. Term Life Vs Whole Life (41 Personal Finance Experts Pick A Winner)

A quick search in Google and you will find several posts all with different answers on which option is best. Whole term life insurance quotes.

These answers for the most part are sometimes hard to understand.

Even with educational tools like my ultimate guide, understanding insurance in general can be a bit of a task.

I promise that today you will get a definitive winner and a solid understanding of why the winner was chosen. ​

Most of the battles end in a draw and the person sharing the information just won't seem to give a direct answer.

So, I took a different approach:

Instead of creating another post about term vs whole life insurance I decided to go straight to the source. People who deal with these questions daily.

I asked over 100 personal finance experts and bloggers a simple question:

Term life vs Whole life, which would you choose and why?

These experts are among the top in the industry, some of them have overcome thousands in debt and others are licensed professionals.

I wanted to see if whole or term would win this epic match up...

So, should you buy term or whole life insurance? Here are the results to the battle we've all been waiting for:

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The experts prefer Term Life Insurance, but is it for you?

We ​wrote a post about why it's much easier to buy term life insurance online if you are not sure of the best route to take.

If you decide the coverage isn't right for you, cancel any time before the 30 day free look period ends for a full refund.

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Whole life insurance is more of an investment vehicle.

You are better off keeping insurance and investments separate.

Buy term insurance for the death benefit coverage you need.

Use the rest of your available dollars for your other goals.

For most individuals, there is no real comparison between Term and Whole life coverage.

Term is by and large that best product for most individuals.

Term is the better option for a number of reasons, such as being significantly cheaper and usually allows you to get more coverage.

Term coverage will expire, thus the term, but it's the better value and the option my wife and I go with.

Many sales reps will try to convince you that Whole life coverage is the route to go but it's simply not a good fit for most individuals.

There are many factors that go into answering the question of whether you should purchase term or whole life insurance.

A few of them include your age, general health level, your children's age, your debts, and the financial needs of your family (if you have one)

There are others. And in some instances, it may be advisable to purchase both types of policies.

In a nutshell, term life insurance comes with a death benefit only, and this is only paid if you pass during the term of the policy, hence its name.

Where to get life insurance

It is purchased for a preset period of time, usually 10, 15, or 30 years.

It is more expensive the longer you wait to buy it, however, it is generally less expensive than whole life.

With whole life insurance, you are covered for life, it also comes with a death benefit, but also typically builds cash during its life.

A medical exam is usually required to see if you qualify and as stated, it is generally a little more expensive than term life.

To give you a few examples of which is the best route to go.

A parent who is rather young, with children and who is the primary income earner for the household might want to go with a term life insurance policy.

One that would completely take care of your family's obligations financially speaking should you pass prematurely.

If you are older, say beyond the age of 60, and your children are already grown and earning their own money.

A whole life policy might be a better bet which would cover the monetary needs of your spouse if that person lives well beyond your passing.

There are too many different scenarios to list out here.

Your best bet for making the right choice is to contact an insurance agent.

And go over all of the particulars of your personal situation to learn which type of life insurance policy is best for you.

I would almost always choose a term policy (I hate to say "always," but it's hard for me to find a case for whole life).

The reason is that I want control over my investments, which means I don't want my investments wrapped up with my life insurance policy in a package that isn't completely transparent in terms of the benefits and returns.

Plus, even with the most optimistic "estimates," I feel much more confident about both short term and long term returns from pairing a term policy with my own investments in index funds at the same total monthly cost over all whole life policies I've seen.

We have purchased term life insurance a few times, with the last being just a few months ago.

We prefer term life insurance because it's cheap and easy to understand.

We purchased an additional $750,000 in term life insurance coverage on me a few months ago.

The kicker? 750K in coverage for me was less than $28 per month.

The same policy would have easily cost $500 or more per month if we had purchased whole life instead.

Life insurance is not an investment tool.

Not only that, but life insurance should be used to cover expenses that may be result in your early death.

Coverage such as missed wages, mortgage, college.

It is not a tool to give your loved ones wealth.

I'm 41 and married with 3 young kids.

I chose term life insurance ten years ago (I bought a 20yr $500k policy).

This is best for me because I expect my kids and wife not to depend on me for income after the 20 year term.

I see whole life as a good product for people with long-term dependents (i.e. children with special needs).

I prefer term life insurance because it insures what people really need.

Unexpected death causing a sudden shortfall in income.

Without adding in the complexity of the investment component of other types of life insurances.

If you are filthy rich, with cash flow coming out the wazoo, then having a whole life policy is fine, despite the fees.

Whole life is another tax efficient investment vehicle to help grow your wealth.

But for 90%+ of people who need life insurance, term life is the way to go.

Fees are much lower and you're allocating capital 100% towards a specific need.

Always review your net worth and future liabilities each year so you can properly ascertain how much term life insurance to have.

It's more affordable for young families and it gives you more flexibility in terms of changing your policy down the road.

I'm also of the belief that you should only require life insurance if you can't afford if something does happen.

For instance, a popular policy for millennials is a term life for 20 years for say $500,000. That secures you for 20 years.

Hopefully during those 20 years you've saved up enough and have enough assets that you won't need life insurance (or you can afford the higher cost of life insurance) when your term is up

I'm not a fan of whole life insurance as an investment.

Advisers love to point out its tax and liquidity benefits, but I think those are outweighed by the poor investment return found in most whole life policies.

Dave Ramsey said the average return of a whole life policy over 30 years is 2.6%.

I also don't like how the premiums are essentially forced.

If you stop making premium payments, the policy must take the premiums from somewhere, so it either pulls them from the cash value or creates a policy loan.

When neither are available, the policy lapses, and the owner could lose a high percentage of his/her initial investment.

Name another investment with such "forced contributions." They don't exist.

As for the tax and liquidity benefits, tell me what benefit it is tax-wise to pull out cash from an investment that hasn't appreciated.

That's the case with most whole life policies for the first 7 to 10 years.

There is no tax benefit during those years because even in a taxable account, you can pull out your money tax-free up to its basis.

I think the liquidity benefits are also overstated.

They're nice for short term loans but many people take loans to supplement their retirement income.

The problem is policy loans accrue interest, and you could end up in a situation where you have to pay the loans down, something people never consider when they view their policy as something that gives them money.

I say term is the right choice for short term coverage needs, and for the few people who need permanent protection (for example, for estate planning needs) I recommend guaranteed universal life.

Guaranteed universal life offers a fixed level premium and face value like whole life, but typically at half the cost.

The only time I recommend whole life is when purchasers are looking to cover final expense needs, or who have tough health conditions, and can only qualify for guaranteed issue whole life policies.

It's also useful in some unique business planning purposes.

I choose Term life insurance because it's cheaper and easier to understand.

I want to make sure that my wife and kid won't struggle financially in case I pass away.

Senior life insurance

We only need 20 years coverage because our kid will be independent by the end of the term.

Whole life insurance might be a good fit for some people, but I'd prefer to manage my own investment.

I'm a huge fan of term life insurance policies because the premiums are much more affordable.

I've never seen a situation where I recommend a whole life insurance policy to a millennial.

I'm a fan of the popular concept of buying term and investing the difference.

There are specialized cases where whole life insurance works, but the vast majority of people‎ are better off going with renewable and convertible term insurance.

The cost of whole life insurance is onerous and the investment portion of the plan typically face high fees and under perform.

I tend to think Term Life Insurance is a safer bet.

It has more flexibility and you can choose a time frame that works for you.

It's best to get life insurance when you're young and rates are more affordable.

We chose term life insurance because it offered the amount and type of protection we wanted at a price we could afford.

We signed up for term life in our 20s and got a great deal.

During this time, the money we saved with term instead of whole life went towards other goals like getting out of debt, building our savings, and now investing more for retirement.

We have a few policies (added them when we had kids) with either a 20 year or 30 year term. The plan is that by the time they are over, we'll have accumulated enough assets to cover things.

I think people in a position to choose should split the difference and get both, either using a policy with a rider or two separate policies.

The term life chunk will work better if you die soon and your beneficiaries need a lot of cash the long run, the whole life policy will be more flexible and longer lasting, and meet more needs.

I have for my family and would always advise term life.

I like to have the coverage at a low premium for a period of time typically when children are young.

The goal is always to build wealth and become self-insured, so life insurance is no longer needed.

I recommend whole life insurance for everyone because the benefits of coverage, the building up of a cash value, and the fact that an individual is covered more than 20 or 30 years is always a plus.

However, if someone can't afford that, then I recommend a return-of-premium term insurance policy.

It costs a bit less on a monthly basis, gives the insurance benefit of lump sum coverage during the term, and if it is not needed, the policy holder gets the premiums paid in back.

So it ends up being a forced-savings account.

With either of these options, the insured's family has coverage and are building up some sort of cash value.

I would choose term life insurance.

If you're investing properly, you should no longer need insurance after a typical long term life policy has expired.

Pay the term life insurance and invest the difference between the whole and term life policy costs.

I would only consider term life.

It is the simplest and cheapest way to secure a benefit for your family in the event you pass away, and that is the main reason for owning life insurance.

If you want to build cash value, take the excess payments you would make on whole life and pay them into a mutual fund.

I go the term life insurance route:

Term life insurance was simpler and cheaper.

Pay a (usually) low monthly premium for a set term and receive set coverage. SOLD!

I only need insurance to pay off my mortgage and provide a lump sum for my husband in the event of my death.

Once I'm retired, my house will be paid off and my investment portfolio will take the place of that lump sum.

That will also be right around when my term life insurance will be expiring.

There is no need for whole life insurance if you pay off your debts and save diligently.

For most families, term is the way to go—it provides homeowners with low-cost coverage.

I know what you're thinking: term insurance is like rent—you're throwing your money away.

You could say that about other types of insurance too.

You're not going to go, "Aw shucks, my home didn't burn down, so I paid for home insurance for no reason all those years!"

So, how long should you cover yourself with term life insurance?

For families with young children, term 20 is probably the way to go.

Your family will be protected until your children are grown up and (hopefully) financially independent.

Since quotes for term vary among insurance companies, get a few before deciding which provider to go with.

Only about 57% of people have life insurance coverage at all, according to a Bankrate survey, and about half of those respondents don't have enough coverage.

So for the vast majority of people, term life insurance is the way to go.

It's cheap, so people can buy as much life insurance as they need, which is generally at least 10 to 12 times their income.

Whole life insurance is much more expensive, making it difficult, if not impossible, for people to buy enough insurance to really meet their needs.

Term is the right answer for 99% of people, including high earners like doctors.

There are very few exceptions to this general rule. Whole life is generally a product made to be sold, not bought.

I’ll be very clear with my opinion here.

Permanent life insurance has its place, but it’s for maybe 2% of the population who has accumulated a lot of money and is trying to plan the passing of that money to future generations.

Young people starting their families typically have no need for permanent life insurance.

For most millennials, term life insurance is sufficient.

Term life insurance is easy to understand and inexpensive.

Then you can use the additional money that you would have spent on a more expensive whole life policy on other financial goals like investing for retirement.

I would choose term life over whole life, and actually already made that decision a few years ago!

I have a $1 million term life policy to protect my family in the event of a worst case scenario.

Cheap life insurance for family

The monthly cost of term life is much lower than whole life, and if you want to invest for retirement, you can find a better return elsewhere.

And, by the end of the term, you should have enough in savings and investments to cover your family's needs.

Term life is definitely the way to go!

Cheaper and covers you for when you need it the most — your earning years.

I've actually chosen both Term and Whole Life Insurance.

I own several insurance policies, some of each.

Term insurance is a great way to get covered for a very low price if you are healthy.

However term insurance is temporary, and typically lasts 10 or 20 years, maybe 30.

You can keep whole life insurance for your entire life, and it also has an investment component, allowing you to accumulate money within the policy.

The payments you have to make are much higher, but if you have the ability to save and are not living "paycheck to paycheck", it is a worthwhile investment over time.

I know people who have used the savings in their whole life policies to pay for college educations, pay for weddings and other expenses that are fairly substantial.

It's just that it is a lot more complicated to explain, and that's why people sometimes shy away from it.

I would choose Whole life cover to meet my and my family's needs.

Although it takes awhile to build up a decent cash value, I think that in the long run it will save us money.

Being able to access a portion of the cash value is really invaluable to us, because we never know what life will throw our way.

Start with Term Insurance. It's the most affordable.

Whole life only if everything else is funded: retirement, emergency account, investments etc.

Whole Life is how the wealthy pass their wealth on generation to generation.

Deciding between term and permanent life insurance really comes down to your individual financial needs, as both types of life insurance have their pros and cons.

If you're looking for a low-cost way to get ample, affordable coverage, term life insurance is a good choice. It's also very simple to purchase  and maintain.

A permanent policy, like whole life, might make sense if both an investment (because you've maxed out other tax-effective accounts) and a life-long insurance need is present.

Because permanent life insurance is more complicated, buyers work with a financial professional to choose and maintain a policy.

If you're in your late teens or early 20s you can lock in a very inexpensive term life insurance rate for the next 20 or even 30 years.

At that point you'll likely be at the peak of your earning years and your household will be better able to withstand the financial impact if you were to die unexpectedly.

I suggest young people buy term life policies precisely because they're hale and hearty.

They may think they don't need/can't afford life insurance.

But they DO need it and they almost certainly CAN afford it, even if they're stuck with student loans on a starter salary.

It can cost as little as $11.60 to $13.08 per month for a 30-year-old nonsmoker to get term life insurance.

As little as 39 cents to 43 cents per day can provide the coverage that will make the survivors' lives a lot easier.

(Both spouses/partners should get this insurance, by the way.)

Still think you can't afford it?

If so, think of it this way: If your household is living paycheck to paycheck now, what would happen if one of those paychecks disappeared?

Even if you're single, the insurance would pay for funeral expenses and the costs of dealing with your estate (even a small one can be a fair amount of work), and provide some money for grieving parents and siblings or, say, college funds for a beloved niece or nephew.

Using those figures above, you'd spend $2,784 to $3,139 during a 20-year period and $4,176 to $4,708 for 30 years of coverage (less than that, probably, if you buy earlier).

Sure, it would be nice to have that money in your pocket. In the grand scheme of things, it's chump change.

Imagine you or your partner/spouse dying suddenly.

The grieving survivor and any kids or other dependents you have would have to make some tough decisions while reeling from shock.

(Can we afford the rent/mortgage? Will I have to take the kids out of the school and neighborhood they love because we can't afford to live here? What about health insurance? I'd planned to be an at-home parent for another four years but now I have to find a job and child care right away because our savings will vanish within three months...)

Some tout the benefits of permanent life insurance. However, that's often because they make a lot of money selling it. For most people, term life is a better fit.

For most individuals term is an excellent value for pure insurance coverage on your life, if you have dependents.

If you lack people dependent on your income, then you probably don't need any insurance.

If you're wealthy and older, a business owner, need to protect a disabled child or have a complex financial circumstances, there are occasions when Whole Life Insurance is appropriate.

If you meet those criteria, find yourself a skilled insurance professional to discuss the possible uses of a whole life policy.

Make sure you understand the benefits, commissions and surrender fees if you find you need a Whole Life Policy

My vote is for term insurance.

Why? The reason for any insurance is to protect against a specific need.

Most people have a need for a specific period of time such as until kids graduate from college, a mortgage is paid off or until they retire.

As term policies come with different guaranteed level premium periods, it is easy to match the need with the coverage amount.

If we are doing retirement planning, will have other assets to offset any need for life insurance.

If someone does have a permanent need, which is a small percentage of the time, a guaranteed universal life policy which functions as a life long guaranteed premium term policy makes sense as it will have a lower premium than a whole life policies.

Whole life policies do accumulate a cash value on a tax-deferred basis, however, the net rate of return is low when compared to a balanced investment portfolio and the insurance cost, expenses and method of determining the dividend scale/interest rate are not disclosed.

When it comes to term life insurance vs whole life insurance, I would choose Term Life.

It's always going to be the most affordable and give you much more coverage for the price.

I only offer whole life insurance to my clients that require a guaranteed acceptance policy or have medical conditions that won't allow them to qualify for a traditional term life policy.

I've not found any reason to offer a traditional whole life product to my clients and that 99% of the time Term Life Insurance works best.

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Posted by at 02:21PM

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