Whole Life Insurance Advice—Is It Better?

If you have decided that whole life insurance is the route you want to take, you need to be well-aware of both its pros and its cons.

Whole life insurance covers you for your entire life, as opposed to term life insurance which only covers you for a certain number of years. However, with that additional coverage comes additional costs. Isn’t that the way things always happen? With whole life insurance, not only are you paying for the cost of the insurance, but you are also paying for the cost of investment. Some have referred to the investment costs as “forced savings,” and, admittedly, there are ways of saving for retirement that make more sense to some. As you get older, the cost of insurance coverage gets higher and the cost of investment gets lower. If you decide to cash in your whole life insurance policy, you may be paid in cash or in insurance that has been paid-up. Yet, with commission fees, market fluctuations, and hypothetical numbers that agents use for illustration purposes, it is not so easy to know how much you will cash in.

Still, there are many wealthy people who opt to purchase whole life insurance policies, and for a good reason. Whole life insurance policies help them in estate planning. By setting up an insurance trust through whole life insurance, they can make sure the proceeds of their insurance policy are used to pay their estate taxes. This is helpful, as estate taxes would otherwise be left to be paid out-of-pocket.

After understanding whole life insurance, it might not seem as safe and secure as its name sounds. Yes, you will be covered for life, but there are also additional costs for coverage that some people just do not need. If you have the extra money to invest in whole life insurance, by setting up an insurance trust, you won’t exactly be wasting money, either.

Top 5 Ways To Save Money On Your Life Insurance Policy

Life insurance is a very important type of insurance policy, and enables us to provide our loved ones with valuable financial security in the event that we die unexpectedly. Life insurance is designed to pay out a lump sum to the named beneficiary in the event that we die within the term of the policy (subject to exclusions and conditions), which gives our loved ones one less thing to worry about at an already stressful and upsetting time.

There are different types of life insurance available, and a choice of levels of cover depending on your needs and circumstances. The cost of life insurance can vary based on factors such as the level of cover taken, your age, your medical history, your gender, and your lifestyle. There are certain factors that can really push up the cost of life insurance, and making some changes can help you to keep costs down considerably. There are a number of steps that you can take to try and keep life insurance premiums down:

1. Give up smoking. If you are a smoker you will be classed as a high risk customer to a life insurance policy, as the chances of contracting a life threatening disease, such as cancer, are vastly increased. By gibing up smoking for at least twelve consecutive months you could enjoy a healthier lifestyle, save a fortune on the cost of cigarettes, increase your life expectancy, and reduce your life insurance premiums.

2. Improve your diet and exercise. Anyone that is seriously overweight will also be classed as an increased risk to life insurance companies, as this is a condition that can bring with it a number of serious and potentially life threatening problems, such as increased risk of heart attacks. By making improvements to your diet and stepping up the exercise you could start enjoying a better lifestyle and you could reduce the cost of your life insurance premiums.

3. Turning veggie could help! Although vegetarianism is not something that all life insurance companies take into account when setting your premiums, there is now life insurance available that offers reduced rates to those that are vegetarian or that eat only fish.

4. Make sure you compare a number of policies. Cutting the cost of your insurance cover isn’t all about your personal circumstances and lifestyle. You also need to remember that the cost of cover can vary widely from one insurance provider to another, so make sure you take the time to compare a number of policies and see which one offers the best value for money.

5. Choose the most affordable policy. The cost of your premiums will also vary based on the type and level of cover that you take. For instance, term life insurance cover will be cheaper than whole of life insurance cover. Select your policy based on the amount that you can afford to spend on premiums, but do be careful not to underinsure, as you could otherwise end up paying premiums on something that your loved ones will not really benefit from ultimately.

The Different Types of Life Insurance Explained

There are numerous companies existing today that offer life insurance policies. Though the crux of the policy (to ensure a safe and sound life of an individual’s survivors as well as to the individual) does not alter yet companies try to differ with each other by making different classifications or bifurcations.

Broadly the life insurance is divided into two parts.

1. Term Life Insurance Policy- Anyone can opt for a term life insurance. This type of policy is basically meant to cover a person’s short term requirements. For instance if the policyholder unfortunately meets with a grave accident, he can claim for the insurance amount. But it also compensates the bereaved in the case of death of a family member. All in all it is a policy that helps in covering potential need for life insurance in the short run.

Term life insurance is usually a renewable and convertible program. It ranges from one to hundred years. If it is a one year program then the cost of its coverage increases after every one year till the time it expires. Generally the expiry is at the age of 75. While if the policy is term to the age of 100 along with cash value it subsequently becomes a part of the insurance for ‘whole life’. Quite often it is noticed that it is cheaper to buy a whole life insurance policy than a non-cash one in value Term 100 policy.


2. Permanent Life Insurance- this is life insurance for the entire life of the individual. The value of this policy increases throughout the time one participates in the program. Terms such as Par and Non-Par are widely used in this context. Par whole life coverage generates dividends that are a partial return of the premium paid for coverage and investment growth. The amount of dividends keeps on changing from annually. On the other hand the non-par whole life insurance policies offer no dividends. The future cash values in these cases are not projected but assured or guaranteed.

• Besides this whole life-quick pay premium policies are also available. In these there is a fixed premium that one has to pay for quit a short interval of time till the time it is entirely paid up. The death benefit in this policy is leveled and paid up at the time the premium ceases.

• Whole life insurance policy can also be fractured in terms of premium payable for 15 years, 20 years and 65 years of age. The terms and conditions in these cases remain more or less the same.


• Universal life insurance policy is meant for people who require a life insurance, have a big marginal tax bracket, have big RRSP and pension contributions, paying a good tax on investment income, want to have an additional future income and have an investment prospect for at least 10 years. These policies are considered to be most difficult of all the insurance contracts.