I was told that a whole life policy may be better than term since I will be able to get all my premiums back in 35 - 30 years. Is that true?
Answers | 6
Many term life insurance policies do come with return of premium riders that will payout an amount equal to the premiums paid. Most permanent life insurance policies can be setup so that cash value accumulates over time.
Which policy type is better for you depends on many factors, including your budget, how much death benefit you need, for how long it will be needed and for whom it it is needed, your risk tolerance, your marginal income tax bracket, whether you own a business, and your personal saving discipline. And I'm sure I've omitted a few factors.
As you might surmise from this list, it sometimes means that more than one type of life insurance may be best for you. A good financial planner or insurance advisor can help you sort this out. I would steer clear of people who only recommend one type of insurance for all situations as the is one area where there is not one single answer for every situation.
Whole life has equity that builds inside that you can use later in life that pays back your premium plus a return. Consider it as a savings account.
Also to be considered is the cost of borrowing on your policy, since one of the features of Whole Life insurance is the availability of funds in emergencies. In looking for a policy of this type, seek a policy that has loan interest that is not significantly higher than the interest generated in the policy.
It may be that the premium for the appropriate Face Amount of Whole Life is higher than you can afford. Many companies offer a blend of Whole Life and Term to take advantage of Whole Life features while having the immediate benefit of the initially less expensive Term.
Basically you're being asked "do you want your money back?" the answer is yes, you can do it that way with a whole life.