An insurance agent has suggested that I buy term instead of whole life. Does it make sense to buy term and invest the difference?

 In
0

“Buy term and invest the difference” has been a popular sales slogan for term life. The pitch compares term, the least expensive form of life insurance, with other kinds of life insurance.

Example:

  • $100,000 death benefit at age 35
  • Annual whole life premium: $1,800
  • Annual renewable term premium: $250
  • Difference: $1,550

What are your choices?

  • Buy whole life. The “difference” is used to keep your premiums lower than the actual cost of insurance as you get older.
  • Buy term. You keep the difference.

In addition, make sure you consider the following:

  • As you get older your term premiums will increase to keep up with the cost of insurance;
  • If you invested the difference, you could use your investment to pay the higher cost of insurance;
  • If you spent the difference you will have to dip into other savings to pay higher premiums; and
  • If your health deteriorates you may not be able to buy a new policy
Recent Posts
Contact Us

We're not around right now. But you can send us an email and we'll get back to you.

Not readable? Change text. captcha txt
What happens to the cash value after the policy is fully paid up?
For 10 years I paid the insurance company $1,000 every year. That’s $10,000! But when I cased in the policy they sent me only $5,800. Where did the rest of my money go?