There are important differences between Term and Whole Life Insurance, but don't think that one is bad and the other is good. It depends on the situation. You get more term insurance than whole life per dollar spent, but this is because whole life is more than just insurance against accidental death, it is also an investment. As such you can figure it into your overall investment planning for retirement.

An Investment

How is it that any life insurance can be an investment when the majority of policies will only pay after someone's death? Let me share a true story which was told to me by my mother. She stated that my father purchased a whole life policy within 2-3 years after they were married. Until then he had only had a Term Life policy through his work which would only cover just a tad bit more than the burial expenses. This new whole life policy would provide my mother which a bit extra so cover the bills if anything should happen to my father.

This Whole Life policy helped them realize a dream come true and make extra money along the way. Several years went by. Along came one child, then two, then three and four. They bought a house in the suburbs, but their dream was to get a small parcel of acreage in Central Florida's horse country. Finally an opportunity came--five acres. The price was right, but $1,000 was needed for the down payment; the balance could be paid off on time by monthly payments. Mom said the payments weren't a problem. By then my dad's salary could handle the extra for the monthly payments, but where would they get the thousand dollars?

Mom said she wracked her brain every which way, but couldn't see any way clear to get the thousand dollars. Then one day she thought of the Whole Life insurance policy they had been paying on several years. She remembered the young salesman sitting at their kitchen table explaining benefits of the whole life policy without dying versus term life in which someone else collects at death.

The ability to borrow funds from the policy is one of the big benefits of it. She was able to phone the insurance company and learn that the policy had grown to having a cash value of more than $1,000 that could be borrowed against.

You Can Borrow From The Policy

Can it make sense to borrow money from your insurance policy? You bet it can. The interest rate will likely be lower than anything you can get anywhere else such as a home equity loan and you won't be on a schedule to pay it back. You should at least make regular payments on the interest accrued to keep the loan balance from getting larger. The insurance company won't determine how much you should pay every month. The amount is up to you, so you can't be penalized for missing a payment. You will want to repay it eventually though, since the idea behind getting life insurance in the first place was to have the cash value available to you or your heirs at some time in the future. The only reason not to pay it back would be if you used the money to make an even better investment, such as buying property that would appreciate in value.

Mom said that little Whole Life insurance policy really saved the day a few other times too when they needed a few hundred dollars suddenly in an emergency. Just like the little Energizer bunny rabbit, it just kept on giving and giving. A Whole Life insurance policy may 'literally save your life' some time when you need money and can't borrow money from the bank for one reason or another.

Be assured, Whole Life Insurance can be a life saving asset. So do yourself a favor and at least request Whole Life insurance online quotes along with any Term Life quotes you may be obtaining. Compare your lifetime needs against each policy type and then you'll be in a position to make an educated decision about what's best for you.