Should you buy Term Life Insurance and invest the difference (as compared to paying a Whole Life Insurance premium)?

Posted by:  BeamaLife Editor  on 5 Mar, 2010

I was listening to a personal finance podcast the other day, and the question was raised again about what kind of life insurance someone should buy.  The host went on for the next couple of minutes talking about how everyone should “buy term and invest the difference.”  Now I’m a fair person, and I admit that there are many, many times when that makes more sense than any alternative.

But if there were a doctor out there who, for every patient, wrote the exact same prescription, it wouldn’t be long before that doctor would be out of patients at best, and in jail for malpractice at worst!  In my experience, absolutes only work as descriptions of reality.  One plus one equals two.  The sun is the center of our solar system.  Beyond things like that, absolutes just don’t work.

And when it comes to financial planning, it makes sense from my perspective to take a long, hard look at the patient before recommending a course of treatment.  Whole life insurance sales, according to recent figures, are now selling at a rate that is much higher than the year before.

Here’s one reason why.  In order to beat the return on your investment in a whole life policy, you’d have to average 10% or more on your investment of the difference between what you’re paying for term life and what you would have paid for a whole life policy.  Can anyone show me an easy way to make that kind of return these days?  I can’t think of one.

And here’s another reason.  The Pollyanna mindset that says “let’s not worry about today, because tomorrow will be even better!” has all but disappeared as the various sectors of the economy have fallen like dominos over the past couple of years.  Stocks are just now beginning to recover, but jobs are still nowhere to be found, real estate values are not even beginning to show signs of growth, and with looming changes in heath care and taxes, the average American has very little hope that the next five years will bring prosperity back.

At BeamaLife we’re experts in all kinds of life insurance products like term life or whole life insurance, and we know how to help you find the one that makes the most sense for where you are financially right now.  So don’t buy into the “buy term and invest the difference” mentality.  For many people, it’s more like “buy term, plan to invest the difference, spend the money on other things, and then find yourself without the coverage you need when you need it most.”

Call one of my experts today at (877) 972-3262 for a free, no-risk review of your life insurance.  We’re your best resource for advice, and the surest way to get the coverage you want for a price that you can afford.  Your family and your financial future deserve nothing less!