What does a whole life insurance policy offer?
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First of all, any “good financial advisor” who makes a blanket statement that no one with a “true need” for life insurance should ever buy whole life is not a good financial advisor. The same can be said regarding ANY financial product. Every product, and every variation of it, is the best solution for a particular situation.
There is a myriad of reasons to buy life insurance, and many of those reasons necessitate Permanent coverage, such as whole life. Even when there is not a specific need for permanent coverage, it may be cheaper in the long run. Participating (dividend-paying) policies will typically be capable of paying their own premiums after about 12-15 years (of course, dividends are not guaranteed, but most household name companies, and many you’ve never heard of, have been paying them consistently each year for over a century). In many cases, the total lifetime premium outlay is comparable or even less than a 20-30 year term policy; and the policy will still be in force when the insured dies, unlike a term policy, which will likely lapse or expire before a claim takes place.
Now, to address the “insurance is not a good investment” argument. First of all, whole life is not sold as an investment vehicle. However, when cash values are guaranteed at around 3-4%, and typically earn about 6-7%, with no risk to principle, it could be argued that whole life is perhaps a very suitable substitute for the bond portion of one’s portfolio.
Bottom line: Most people do have a need for some amount of permanent coverage, and the need and the amount are best determined with a qualified financial advisor or planner.
rob@safemoneyconcept.com
Art Williams Nobody Wants a Boss Everybody Wants a Coach
