When it comes to comparing Term and Whole Life Insurance options, Whole Life policies sometimes get a bad rap. One reason being that it costs more for the same amount than term level life insurance. Term Life has its place for a young couple starting a family. They need as much insurance as they can afford. However a small whole life policy would be a good investment, and should be worked into their financial planning if at all possible.

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.

They were truly bowled over by the Whole Life policy for not only were they able to make some extra money, but also it made their dreams possible. As the years rolled by, there were four children one after the other. While it was their long cherished dream to buy an acreage in the horse country of Central Florida, they did manage to buy a house in the suburbs. Finally, it looked like opportunity was knocking at their door - a parcel of five-acres did come their way, the pricing was right. The only snag was they had to pay $1,000 as down payment, the balance in monthly payments. Mom felt the monthly payments could easily be met, with my dad's salary we could certainly make the extra monthly payments, but then the only thought plaguing my mind was where would they go for the $1,000?

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.

One of the benefits was being able to borrow money from the policy. She called up the insurance company and sure enough it had accumulated over a $1,000 cash value which could be borrowed.

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.

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