When I started in the life insurance business in 1995, new agents that came into the insurance business worked for one company. These companies were referred to as captive companies or career companies. The agent could offer products from that one company and no one else. At the time, this was ok. That is how the life insurance business was done. Most products were very similar, and there weren’t a lot of options anyway. There was just not a lot of competition. Term life insurance was also more expensive than it is today, so many chose whole life insurance to protect their lives. But is whole life too expensive?
It all depends on how you look at it. Are you using the policy for pure life insurance protection, or will you use your whole life insurance policy as an infinite banking program? Many of our clients use whole life insurance to finance their lives. You can build up enough cash inside your policy to finance cars, homes, college, and even retirement.
The life insurance arena has really changed over the last 20 years. Although whole life insurance has always been the most sold life insurance product available, is it the smartest policy for everyone? We now see more and more varieties of term life insurance products offered by life insurance companies. There are even many life insurance policies with no medical exam available. This makes buying life insurance an easier choice. We have products that can fit most budgets and offer much more coverage than a whole life policy can. We realize that whole life insurance is not for everyone.
Is Whole Life Too Expensive?
When you get down to it, whole life is really expensive at first. In time, whole life insurance will actually be cheaper on a net basis that term. I ran a quick quote on whole life insurance from a leader in the industry and compared it to a 30-year term policy from another leader in the term life insurance space. Here is what I found:
MetLife whole life premium – $9950 per year
Banner Life term life insurance premium – $913 per year
If you are a 30-year-old male in preferred health and need $1 million of life insurance coverage, a whole life policy with MetLife can run you $9950 per year, while a 30-year term policy with Banner Life is only $913 per year. The MetLife policy will cost over 10 times more than the term life insurance. And yes, there is a cash value built up throughout your whole life. In this example of a MetLife policy, the cash value in the 10th year is around $90,000, and that is assuming a 5% dividend rate.
You have to look at your goals and decide which is best for you.
Deciding Which Kind Of Policy Is Best For You
It’s important that you purchase the right kind of life insurance plan to give your family the money that they need. There are dozens of different factors that you’ll need to account for when deciding if a whole life plan is right for you. Luckily, there are several other kinds of plans that you can choose from if a whole life insurance plan doesn’t work well for you.
As we mentioned earlier, term life insurance policies are a popular alternative because they are much more affordable, but another option is to buy a no-medical exam. As you can guess from the name, these no-medical exams will allow you to purchase coverage without having to undergo the exam. There are several advantages and disadvantages to these plans compared to whole life plans.
The most notable benefit is that you can get life insurance coverage much quicker than you can with a whole life plan that requires a medical exam. With a no medical exam, you won’t have to wait for the insurance company to review your medical exam results, which means you can get life insurance in a matter of days versus the month it could take with a normal plan.
There are a few pitfalls to these plans that may hinder their effectiveness. With a no medical exam, the coverage might be more expensive than a plan with a medical exam. The purpose of the exam is to help the insurance company underwrite your policy with all of the knowledge of your health. Without that picture of health, they are taking a greater risk.
Another significant disadvantage with these plans is that you may be limited in how much life insurance you can purchase with no medical exam. Most insurance companies will only allow you to buy $250,000 of life insurance. For most families, this isn’t going to be enough protection. It’s important that you give your family enough resources to get through the difficult time.
You must understand your options and the advantages of each type of plan. Finding the perfect insurance plan can be a long and difficult process, but it doesn’t have to be. Our agents can help you compare dozens of plans.
You can’t predict the future, which means you shouldn’t wait any longer to get the life insurance protection that your family deserves. If something tragic were to happen to you, your family would be left with all of your debts and final expenses, which can make the whole situation a thousand times worse.
If you have any questions about whole life insurance or other options, please get in touch with us today. We would be happy to answer those questions and ensure you’re getting the best plan to meet your needs at an affordable rate.
Whole life plans are a great option for some applicants, but everyone is different and has different life insurance needs. It’s important that you find a plan that fits your budget and meets your goals.
The bottom line is that you should explore your options. You may find that you need a whole life policy and supplement it with additional cheap term life insurance. We offer many competitive term life insurance products. If you don’t know what type of insurance you should buy or how much life insurance you need, we can help you. We have clients all over the country just like you who benefit from our help. You can start by generating a quote with the calculator on this page. We can walk you through the rest; give us a call or leave us the best number to call you when you are completing the quote request.
Is whole life insurance too expensive?
It all depends on how you look at it. Are you using the policy for pure life insurance protection or will you use your whole life insurance policy as a Bank on Yourself program. Many of our clients use whole life insurance to finance their life. You can build up enough cash inside your policy to finance cars, homes, college and even retirement.
What is whole life insurance policy?
In addition to providing a set amount of insurance coverage for your ‘whole life’ and as long as you pay premiums, whole life policies accumulate cash value from part of the premium being invested. The policy owner is able to access that cash value as the funds grow.
Is whole life insurance good for everyone?
Whole life plans are a great option for some applicants, but everyone is different and has different life insurance needs. It’s important that you find a plan that fits in your budget and meets your preferences. The bottom line is that you should explore your options.