Does whole life Insurance support my family until they die?
If I died at age 35 and had a 12 year old to support, would my child still be getting money from my policy when they are in their 40′s?
I am having trouble understanding Whole vs Term Life.
No. Whole life – and term life – both pay out the "death benefit". That amount of money lasts your family as long as it lasts. If your death benefit is $5,000, it probably won’t cover your funeral costs. Both policy types, pay out a lump sum. Normally.
The DIFFERENCE between whole life, and term, fundamentally, is that with whole life, the price you pay each month (or year), is locked in, your ENTIRE LIFE. You pay the same when you’re 30, or 50, or 90.
With term life, the price is locked in for the term. Usually that’s 5, 10, 20 years. After that term is up, you might be able to renew the policy, but at a much higher rate.
Whole life, costs a whole bunch more than term. WAY lot more.
So what you need to do, is "define the goal". How LONG do you need coverage? Is your 12 year old permanently disabled, that they’ll need lifelong care, even if you die when you’re 90 and he’s 55? If so, you should seriously consider whole life. If you’re expecting your 55 year old to be supporting themselves, then you probably need term life.
Don’t let someone sell you whole life as a "savings" or "investment" account. If you’re in a financial position (debt free, maxing out all your retirement accounts, trying to figure out how to pass your multi million dollar estate along without paying half in estate taxes) you can rely on your financial planner for advice. But for joe average, whole life is a ripoff, if the goal is "savings" or "investment".
Recommended Reading
- Business Insurance Agents
- Sizzling Suze – Whole Life vs Term Life
- Maxine Sullivan on Art Ford’s Jazz Party – 09 18 1958 (Part 8)
- Susan Orman on Life Insurance
- Business Strategic Development (ebook)
No. Both types of insurance pay a one-time lump sum when you die and nothing after that payment.
The difference is how much you pay while you are still alive. With term life, you pay a low amount for the initial term, but have to pay progressively larger amounts at each renewal, making it unaffordable by the time you reach your 70′s. With whole life, you pay more initially, but the rate is fixed and you keep paying that amount, without increases, for as long as you live.
References :
No doesn’t work that way. If you have a $100,000 life insurance policy and you die they will pay the beneficiary a $100,000 lump sum and that is the end of the insurance companies responsibility. A whole life policy has cash value, can be borrowed against, and is in force as long as you pay the premiums regardless of age. A term life policy has no cash value, and covers a specific period of time usually 10, 15, or 20 years at a set premium. Most term policies have a provision to allow it to be converted to a whole life policy.
References :
No. Read the life insurance section at Yahoo Personal Finance.
References :
your agent or whatever should have explained that to you, My agent is amazing at explaining these things I didnt understand a thing about life insurance haha he even drew pictures and stuff to show me it totally helped, heres my email if you want his info alas_demariposa@yahoo.com
References :
No. Whole life – and term life – both pay out the "death benefit". That amount of money lasts your family as long as it lasts. If your death benefit is $5,000, it probably won’t cover your funeral costs. Both policy types, pay out a lump sum. Normally.
The DIFFERENCE between whole life, and term, fundamentally, is that with whole life, the price you pay each month (or year), is locked in, your ENTIRE LIFE. You pay the same when you’re 30, or 50, or 90.
With term life, the price is locked in for the term. Usually that’s 5, 10, 20 years. After that term is up, you might be able to renew the policy, but at a much higher rate.
Whole life, costs a whole bunch more than term. WAY lot more.
So what you need to do, is "define the goal". How LONG do you need coverage? Is your 12 year old permanently disabled, that they’ll need lifelong care, even if you die when you’re 90 and he’s 55? If so, you should seriously consider whole life. If you’re expecting your 55 year old to be supporting themselves, then you probably need term life.
Don’t let someone sell you whole life as a "savings" or "investment" account. If you’re in a financial position (debt free, maxing out all your retirement accounts, trying to figure out how to pass your multi million dollar estate along without paying half in estate taxes) you can rely on your financial planner for advice. But for joe average, whole life is a ripoff, if the goal is "savings" or "investment".
References :
It depends on the amount you left behind and the way they spend. Life insurance pays a lump sum upon your demise. Let’s say you have a life insurance of $500k which is paid out upon your demise 3 years later. Your kid will be 15 years old then and from 15 to 40 years old there s a time span of 25 years, which means your child will have averagely $20k per year to spend. However, he can also choose to spend everything when he is 18 years old to buy a luxury car. In order to ensure that the money can last him till he is independent, ie completed studies and able to get stable and proper job to support himself, you will need to set up a trust to control the money spent. The remaining amount can be given to your child after they started working or past certain age for their family planning like wedding expenses or buy a new house.
whole life and term life are both life insurance that pays a lump sum upon your demise. the difference is that premiums paid for term life is for coverage only but premiums paid for whole life is for coverage and the rest will be invested in relatively safe instruments like government bonds to gain long term returns and thus it has cash value. There is level term life insurance which had level premiums up till 99 years old, depending on insurance company. This means that you pay the same premium throughout the entire policy term. Assuming a 30 years level term life insurance of $2k per year premium for $500k coverage, you will be paying $2k per year for the entire policy term of 30 years. Also, using the example above, you would have paid 3 years and a total of $6k and get a $500k pay out.
Whole life will have a much higher premium and the premium is the same throughout but due to the investment returns, for a $500k coverage policy, the payout upon death will be higher than $500k after some specific years. This is more for people who are not investment savvy and do not want to engage in investment to grow their wealth. If your sole purpose is for protection, then a term life is more appropriate.
If you need further explanation, feel free to email me.
References :
If you buy $1,000,000 of term or $1,000,000 of whole and die they’ll both pay $1,000,000. The difference is IF you want to maintain that coverage for YOUR whole life, then a more permanent policy would make sense. In other words if you’re 35 and buy a 30-year term policy after you turn 66 you’ll unlikely continue your policy and cancel it (because the premium would be tremendously expensive). But, if you pay more now on a permanent policy you could continue the policy until you were beyond 100 years old. Most people would be fine just maintaining coverage during their working years, but nobody can tell you how long you want to maintain your coverage. That’s your personal decision.
References :
If someone dies and the insurance policy is paid up to date, the beneficiary of that policy receives the life insurance money after the death. That is a whole life policy. You are talking perhaps about annuities and I dont know how that works. You should call an independent insurance agent in your town and ask these questions on the phone.
References :