An Easy Long Term Solution
A whole life insurance policy pays out its face value whenever you die. In the early years of a whole life policy, the premiums are much higher than the customer would pay with a term life insurance policy. These up-front overpayments are what keep the later payments reasonable. Otherwise, as you grow older, your premiums would need to increase substantially to keep up with the risk of insuring you. Level Premium Whole Life policies require premiums to be paid your whole life. Limited-pay whole life policies require higher payments for only a few years.
Are you getting a good deal with whole life?
– Probably not. Check out a good analysis by Moolanomy. It also has a comment that sums up my feelings on whole life:
Whole life is a huge rip off for most people. Stick to a combination of a strong savings plan and fixed term life insurance. If 30 years from now you need a large death benefit you?ve done something wrong along the way.
Estate planning does have some use for whole life style policies but most people won?t have an estate that is large enough to need to duck the estate tax and gift tax laws.