Term Life Insurance or Permanent Life Insurance (Whole Life)? Can you afford permanent insurance? Most people can’t.
Should you buy permanent life insurance? Only you can answer that question. Do you want to provide a tax-free benefit to your wife, children or business upon your death, whenever that may be, no matter what? If you answer yes, you should only buy a permanent life insurance policy. The premium for permanent life insurance is higher, it does not “cost more”. Most people who buy life insurance do not have the necessary cash flow to purchase permanent life insurance. As a result, they have 100 reasons for why they don’t buy it.
- Whole life insurance is not better or worse than term. Term insurance is not better or worse than whole life.
- Most journalists, financial planners, CPAs, attorneys and insurance people do not need permanent life insurance because they do not wish to carry life insurance until they die. All you have to do is ask that one simple question to find out who is a permanent life insurance buyer. You will quickly realize their needs are much different from yours. There is nothing wrong or right about this; it just is.
- Most High Net Worth (HNW) and wealthy people DO have the ability to pay higher premiums.
- There is a lot of information “out there” about the right type of life insurance to purchase. However, that information is not sufficiently targeted to a specific audience. If you are making $500,000 per year, do you need information targeted to a family with a total annual income of $100,000?
The typical advocates for term insurance come from those who do not need or cannot afford permanent life insurance. These term advocates promote a 40 year old jingle “buy term and invest the difference”. The problem with that concept is this:
“Virtually nobody invests the difference and it’s not a valid comparison because you cannot buy term in your 80’s or 90’s.”
Term insurance has a place, that is for sure. It was designed to replace your lost income during your income earning years. Or, maybe a special need such as a short-term bank loan. For most people making less than several hundred thousand per year with a net worth of less than a few million dollars, term life insurance is the right choice.
The following video does a great job laying out the virtues of permanent life insurance for High Net Worth people.
Please contact me at 561-869-4500 or email me about a complementary consultation for indexed annuities and a review of your coverage.
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https://en.wikipedia.org/wiki/Whole_life_insurance l https://en.wikipedia.org/wiki/Life_insurance#Permanent_life_insurance
Also published on Medium.