Updated: Sep 3
This article is a REPRINT/REPOST from Christopher P. Hill, RFC® - President at Wealth and Income Group, LLC. It is NOT my original writing. However, if *I* were to write on this topic, I couldn't do much better than this article!
I hope you enjoy it.
For decades, economists, financial advisors and insurance agents have studied, researched and offered a wide variety of ways to explain the differences between Term and Whole Life Insurance. Regardless of how you choose to review the key differences, client decisions almost always boil down to cash flow. Is it affordable and will it fit into their budget?
When you remove the real estate downturn and mortgage problems of recent years, owning a home has traditionally been a much better long-term decision versus renting. Simply put, there are very few individuals or families who would willingly choose to rent a home versus own a home — if — they could afford to own.
Not only does ownership carry a psychological and status gain, but there are also long-term financial and tax benefits that make home ownership the better strategy. It is not difficult to determine who is a more suitable candidate to rent a home versus consider ownership.
The simplest way to review the main differences between term coverage versus whole life insurance is using a four-step, side-by-side comparison. This is based on the assumption that the insured person is healthy and does not engage in hazardous work or personal activities. It’s perfectly ok to rent versus own after reviewing the four-step analogy to explain term versus whole life, the next question to be answered is: “If you/we hypothetically assume that I am going to make the annual payments for you, which one would you choose to own? Term or Whole Life Insurance?” Invariably clients would always choose Whole Life Insurance — if — you remove the affordability factor.