Agent, Rural Mutual Insurance Co., Union Grove, WI
There are many reasons why people buy whole life insurance. The main reason is permanence, it last until you are at least age 100 and sometimes beyond. Where as term insurance is only for a set number of years. Another reason is that whole life policies will typically build a cash value that could be borrowed against in most situations. There are too many reasons to list here. I would recommend contacting your local agent to have them help you finding the policy right for your needs and goals.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Why do people buy whole life insurance? Well, I can give you reasons I did. I simply liked what it does. I locked in a life time rate in a policy that grows over time and builds up cash values that I can get to really easily and I don't have to ask permission from anybody to do so.
I like that I own the policy, I control the policy. I like that as an investment it is dull, boring and does it job of a reasonable return at a minimal risk situation. I like after all my health changes (type II, A Fib) that I do not have to seek out life insurance again because I have mine, locked in for my life. I like how in 2008 when I lost ten years of growth off my investments and my home value dipped too, that my life insurance kept cooking along as if nothing happened. I like that something I have can't go backwards.
I figured out a long time ago, whole life insurance is the most risky thing an insurance company can sell for an insurance company, that is why it is priced the way it is. Think about this if you were an insurance company and price based on risk to the company, would the things that could really cost you, do you charge a little or a lot? This is also why a good disability policy isn't cheap either.
People buy whole life insurance because their insurance professional recommends it. But should they? Whole life insurance for supplemental retirement income may be appropriate for long term conservative savers, who also desire tax advantaged features of tax deferral and the potential for tax free income provided that the policy is kept in force for the life if the insured.
But whole life insurance for protection may not be the most economical approach for permanent coverage. Guaranteed universal life (GUL) is less expensive and although most GULs have little to no cash value, they’re purchase for the lowest cost of coverage.
Generally speaking some reasons are: (1) The earlier you purchase , the lower the premium locked at a rate until age 100-121 depending on the policy.(2)The potential to build a cash value which can be borrowed against in most cases. (3) It is permanent compared to term insurance that is only for a determined number of years.
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I like that I own the policy, I control the policy. I like that as an investment it is dull, boring and does it job of a reasonable return at a minimal risk situation. I like after all my health changes (type II, A Fib) that I do not have to seek out life insurance again because I have mine, locked in for my life. I like how in 2008 when I lost ten years of growth off my investments and my home value dipped too, that my life insurance kept cooking along as if nothing happened. I like that something I have can't go backwards.
I figured out a long time ago, whole life insurance is the most risky thing an insurance company can sell for an insurance company, that is why it is priced the way it is. Think about this if you were an insurance company and price based on risk to the company, would the things that could really cost you, do you charge a little or a lot? This is also why a good disability policy isn't cheap either.
But whole life insurance for protection may not be the most economical approach for permanent coverage. Guaranteed universal life (GUL) is less expensive and although most GULs have little to no cash value, they’re purchase for the lowest cost of coverage.