Getting the right insurance policy can give you and your family an extra layer of financial protection.
No one wants to file a claim on a whole life insurance policy, but some people believe that it’s good to have “just in case.” However, whole life insurance policies are expensive to maintain.
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Money influencer Vivian Tu mentioned a “big caveat” to getting such a policy in a recent TikTok video: Upfront fees and elevated premiums make whole life insurance more challenging than most people anticipate.
But is that always the case? Two financial experts tackle the question on whether you should consider getting whole life insurance.
Whole Life Insurance Isn’t Just for the Rich
Tu said whole life insurance policies are “only good investments for high net worth folks.” Whole insurance policies are more expensive than term life insurance policies, but that’s because of what you get.
You won’t have to worry about a whole life insurance policy expiring, and that can help more people sleep at night.
Dr. Constance Craig-Mason, MRFC® and NSSA®, is the CEO of Concierge Financial Advisory. She is a dedicated financial planner, national social security advisor, investment advisor, and insurance broker. Craig-Mason also teaches clients how to correctly manage their money, and for some of them, that includes a whole life insurance policy.
“Whole life insurance isn’t just for the wealthy — it’s a tool that can build financial stability and security for people from all backgrounds. Whole life insurance offers benefits beyond just a death benefit, including cash value that grows over time and can be accessed for emergencies, college funding, or retirement.
“For those looking to create generational wealth or financial protection, whole life can be a powerful, accessible strategy, even without a high net worth.”
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Cash Value Gives Whole Life Insurance a Key Advantage
Some people opt for a term life insurance policy to save money, but those policies can expire while you are still alive.
While some policyholders accept this tradeoff since they have lower premiums, they aren’t building cash value. Meanwhile, whole life insurance policies build cash value with each premium, and that gives policyholders more options.
Alex Adekola, the CEO and founder of ReadyAdjuster, has extensive experience as an independent adjuster. He has collaborated with numerous carriers in roles such as adjuster, file reviewer and team lead. He explained some of the perks of cash value.
“The way whole life insurance policies work is the payment you make is essentially split in two, the insurance component and the investment component that will help build your cash value and grow at a specific rate on a tax-deferred basis over time,” he said.
“Once this cash value starts accruing after two to five years of you having the policy, you can then borrow against it or withdraw from it. So, it could be a good policy to have regardless of what financial situation you’re in.”
Whole Life Insurance vs. Term Life Insurance
The main appeal of term life insurance policies is their affordability. While cheaper premiums make sense for some policyholders, the more expensive whole life insurance policy offers better long-term protection for other households.
Adekola encourages consumers to review their finances before committing to a policy. While he believes a whole life insurance policy is better for most people, term life insurance policies offer more flexibility for people who have lower budgets.
“It depends on your budget and financial goals,” he said. “If you have a limited budget and aren’t interested in the investment component of whole life insurance, then term life insurance will do the job. It will provide you with high levels of protection at a lower cost.”
While whole life insurance policies aren’t only for the rich, you still need to feel confident about your ability to make monthly premium payments.
A whole life insurance policy gets more affordable over time due to inflation, especially if you need to replace your current term life insurance policy with a new one when it expires. You can also opt for less coverage in exchange for lower premiums.
Craig-Mason believes whole life insurance is better in the long run. Essentially, you’re getting what you pay for.
“Term insurance is often more affordable initially, but it’s temporary coverage, which means it ends after a set period,” she noted. “For families focused on long-term stability, whole life can be a better fit. It’s permanent, so coverage doesn’t expire, and the cash value offers a way to build financial resources over time.
“The key is finding what aligns with your financial goals — whole life can provide more than protection; it’s a tool for building wealth over the years.”
Should You Invest in Stocks or Whole Life Insurance?
Stocks can appreciate in the long run and set you up for a better retirement. However, whole life insurance can provide a payout right away in the event of an accident. Whole life insurance provides security right now while investing in stocks offers security in the long run.
Craig-Mason said that you don’t have to choose between stocks and whole life insurance. An indexed universal life (IUL) insurance policy appreciates over time like a stock portfolio while fortifying your finances.
“IUL can be a great choice. It offers the potential for higher returns linked to the market without the risk of losing cash value in down markets,” she explained. “This structure gives policyholders a way to build wealth with a level of protection that is especially valuable for those focused on both growth and stability.
“I’m passionate about helping people realize that building wealth doesn’t have to be complicated or reserved for the wealthy; with the right strategy, insurance can become a tool for empowerment, resilience and legacy.”
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This article originally appeared on GOBankingRates.com: Money Influencer Vivian Tu: 1 ‘Big Caveat’ To Know Before Getting Whole Life Insurance
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