CNN Money Questions Whole Life Insurance in Life Insurance News
Many buyers are confused about the difference between traditional term life insurance, and permanent or whole life insurance. They’re not sure how to choose, particularly since there are several variations on whole life insurance as well.
CNN Money addresses these same issues in their article “5 things to know about permanent life insurance.”
Their advice is sound, though we do have to question the first point: “It’s more coverage than most people need.”
On the contrary, most people who purchase whole life insurance do so because they want more than a term policy will offer them. It’s true that a term policy will cost less, but the allure of the whole life insurance policy is that it covers someone’s entire lifetime, not just a specified term, and offers an investment component on top of a regular death benefit.
And we agree that whole life insurance policy holders need to hang on to their policy for a minimum of 10 years (we’ve said 15 in the past). Why? Because it takes a long time before the policy’s cash value catches up with the money you’re paying in premiums.
However, for those who want maximum protection for their family in the event of their death, alongside the ability to invest funds in a tax free environment, whole life and/or one of its derivatives can be just the ticket.
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