Skip to Content

Insurance for North Carolina State Firefighter Association

We Are Dedicated To The Professional Association Insurance Industry Nationwide.
Agent holding umbrella over family

Whole life insurance has long been touted as a wise investment. After all, agents claim, it’s insurance protected by the stock market that never expires. That sounds attractive, but let’s take a closer look to see which has better long-term returns: whole life or term life?

Term Life

Term life is the most common kind of life insurance. Policyholders pay a monthly flat-rate fee for a term of 10, 15, 20, or 30 years. When that term expires, premiums explode from the standard low rate (say $600 per year) to 1000%-2000% of the original premium (An increase to $9,750 per year in our example).

For most, the sharp rise in premiums almost necessitates canceling the policy after the term expires. That means if someone paid their premiums for 30 years at $250/per year and then canceled, they’d have spent $7,500 in their lifetime for no return on investment. The premiums aren’t refunded if the policy is canceled, and the policyholder has no coverage if they pass away.

Whole Life

Whole life plans cover someone for their entire life, but the premiums are significantly higher. On average, whole life plans are 5-7x more expensive than term life plans (around $3,600 per year, using our previous example).

Additionally, whole life plans invest in a “cash value” account. By investing a portion of the policyholder’s premiums, insurers can offer policyholders the same premium across their entire life.

A Big Decision?

Choosing the right insurance plan starts with defining goals. Anyone unsure about which policy they should choose should calculate the return on investment for their estimated premiums, consider their options, and consult an experienced insurance administrator.

If you have questions about life insurance, we can help. If you’d like to schedule an appointment with an experienced Atlanta insurance administrator from Insurance Specialists, Inc., don’t hesitate to send us an email or call (888) 451-0883.