When Purchasing Life Insurance, Which Policy Is Better To Buy: A Whole Life Policy With A Cash Value Or A Term Life Insurance Policy?
With a Whole Life insurance policy that carries a cash value, the policyholder is paying for the insurance policy and contributing towards a savings plan. This makes the monthly premium higher for the same insurance coverage than that of a term life insurance policy.
With this type of policy, they are combining the life insurance policy and a saving fund.
A person seeking life insurance might consider purchasing a lesser expensive policy with the same coverage and opening an IRA or savings account on their own. This would eliminate any fees for taking a loan from the cash value of the whole life policy. These funds could also be invested or used for other expenses.
Another option would be to purchase a term life insurance policy for the same monthly premium that has greater coverage.
For some families and individuals the whole life policy fits their needs, but for the average middle class family, it is usually better to get the appropriate amount of insurance for the best possible price.
With term life insurance, you can get a larger life insurance policy for the same price or you can have a lower monthly premium for the same amount of coverage.
The bottom line with term life insurance is you will save money that can be used for other things.