Whole Life insurance (or cash value insurance) is a type of insurance where you pay a high premium each month. You can cash this type of life insurance out at any time in your life. The thing about whole life insurance is that you pay high premiums for very little return. Although you may have $100,000 in a whole life insurance, when you cash it out, you will only receive about $55,000 of that after taxes and the commissions that come out of the check! On top of that, the premiums for that $100,000 dollar policy will be very expensive compared to the term life insurance! In my opinion, this is a terrible form of insurance. You shouldn't make an 'investment' on something as big as your life. Instead get Term Life insurance.
Term Life insurance is a type of insurance where you pay a low cost balance each month. The main difference between term life and whole life is that in term life insurance, you only get the money if you die, however, you can get a $500,000 dollar policy for as low as $22 a month (this quote was obtained from Zander Insurance)!
If you are stuck in a whole life insurance policy, the best thing you can do is to switch to term life and cash out your whole life policy today! Remember, you will want to get the term BEFORE you cash out your whole life insurance. This is because you don't want to get stuck with no insurance what so ever! One of the top causes of bankrupcy today is the costs of when a loved one dies without any insurance policies.
For more information about whole life vs term life insurance policies you can visit Dave Ramsey's website at daveramsey.com.
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