Because term life insurance is cheaper and it goes to a certain age i think and then they offer full life insurance if one can afford it then it goes to full life

Term life insurance serves one fundamental purpose, and that is, to provide a set sum of money - or face value - in the event of the insured's death. It can be purchased for a term of years, usually up to 30 years, or even 35 years. Some of these policies have a renewal option. As a result, this "protection" insurance is much cheaper than whole life insurance.

A $250,000 whole life policy for a 40-year-old non-smoker might run around $3,000 a year, while a term policy for the same amount of term coverage might run around $350 a year.

Whole life insurance is an investment product and is a type of permanent insurance, which remains in effect as long as the premiums are paid until the policy matures. While it may prove to be a stable, if modest investment, over time, it is expensive relative to the return one might realize with an investment in stocks or bonds. Since the policy retains a "cash value" during the policy period, one can borrow against the policy for a particular need.

CEOs are typically offered whole life policies as part of their compensation package, for which the premiums are paid by the corporation.

I hope this is useful to you. Thank you for your question, TPSicotte.

As Peanutbred pointed out, term life insurance is much more affordable for most people.

Life insurance should be viewed as a way of replacing the income a family loses when one of the breadwinners dies unexpectedly. The family of mom and dad in their 30's with 2 or 3 children is counting on at least one, and more likely two respectable incomes to pay the bills and raise the children. Those needs are much lower 40 years later, when the mortgage is paid and the kids educated and raising their own children. The 250k - 300k needed by the younger family to replace a breadwinner's income, then, isn't a constant. Whole life insurance doesn't recognize this, requiring that policyowners pay for far more insurance than they actually need later in life. (Cashing out a whole life policy, or even just drawing it down, is a game heavily rigged in favor of the insurer, with the policyowner losing a bundle in the transaction).

It all depends on the expert you listen to. Whole life can be a good investment in a balance portfolio. It is not volotile like stock or other investments. It really depends on your risk level how much you should invest in whole life and other investments. Always examine the motives any one you call an expert. Dalbar an independant investigative organization says that even mutual funds for the average investers only plays out to roughly 2.9 percent gain on your money. Even though the market shows an average of 10 percent.

Experts suggest term life insurance because it is pure insurance, no gimmicks and no extra profit potential for the insurance company. The difference in the cost of term vs the cost of whole life should then be used for investment purposes. The experts understand this is the best way to purchase life insurance, but also realize that people rarely use the difference between the two for investment.

Whole life is touted as an investment , but it is insurance that helps the insurance company's bottom line. The reason that company CEOs have large whole life policies, is that the CEOs do not pay for the policy, and is usually a part of their employment contract. It is a perk that allows them to wring more money from the corporations they run. Term is not good for them, as they have to die and then they can not spend it.. Since they have not paid any premiums for the whole life policy, any cash value is 'gravy' to the CEO.

One of the main reasons is the money that you have to invest on the insurance. If you go for a whole life insurance policy, then you will have to pay a huge amount at once and that would be an extra burden for you. So many people does not go for it. But still rich people go for that without any problem.

But if you go for a term life insurance, then you do not need to invest a big money there. And still you can renew your insurance in the future. So many people go for this type of insurance. That would increase the business of the insurance companies and also that would be easy for you.

So many companies and even experts always encourage you to go for a term life policy hence it is very easy for anyone who are interested. And there are few more reasons also for that.

Most do offer this because it is cheaper, but it really depends on each persons situation. For example:
A newly married couple is having a baby, they will want to purchase a term policy for maybe 20 years. This is good because after 20 years they child is grown and their life situation has changed and they wont need that much insurance anymore. But if they add a return of premium rider to the policy they will get all the premium payments they paid back. And they can use this to purchase a different policy.

Now someone who whole life would be good for:
Someone 55-70 years old that is wanting to cover the cost of their funeral and have a little left over for the family. This matches them because they don't know when they will die. Also the price of term policies goes up the older you are. So purchasing this whole life policy will cover them until they die. It is usually more money, but not a huge difference in money.

Also some whole life policies don't need a medical exam so it would match someone who has had some health problems in the past. Many term life policies will deny coverage to certain people who have had some major health problems. In this case the whole life policy would be best. You just answer a few questions, if you answer no to all of them then you will get approved. So I tend to disagree with "experts" that say only buy term. It doesn't work that way, different people have different needs. Just pick the product that matches your needs and you will be happy.

One of the major issues leading to the contradictory views about life insurance is that there are those who are for whole life policies and those who are decidedly against it. Whole life insurance is a form of permanent life insurance that has a delayed cash value accumulation. Term insurance is temporary insurance that offers coverage for a lower premium and a limited period. Insurance agents attempt to sell persons cash value insurance because the premiums are higher and commission rates are higher as well.

However, the everyday Joe likes the idea of cash value insurance because of the forced savings benefit. Few persons like the idea of term insurance because they are not going to "get back anything." Such thinking clearly does not incorporate the concept of opportunity cost.

Some experts suggest that term insurance is better because it is cheaper and fulfils the needs of most clients. They go further than that to suggest that whole life insurance is bad; it gives greedy insurers additional profits and usually forces the policy owners to borrow their own money at interest through the nefarious policy loan system. So why do some persons use it?

Well, other experts suggested that some whole life plans are great. For example, Pamela Yellen advocates the "Infinite Banking System" using a specific plan - dividend-paying whole life policies. In addition, some persons (like CEOs) can afford the higher premiums and need permanent insurance for estate planning purposes. Whole life (and other types of permanent insurance) is best-suited for estate planning, which high income-earners are usually more interested in. The average Joe just has final expenses and family income protection to consider, and those are usually medium-term needs.

The debate between whole life or cash value plans and term insurance would go on forever. However, as a former insurance advisor, I believe in using plans on a needs basis. Some agents encourage persons to purchase cash value insurance for mortgage protection. Then too, if you are concerned about estate planning, term life insurance would not be best suited to your needs. Unfortunately, too many persons buy into the idea that cash value insurance is better.

An example can illustrate the basis of the notion to "buy term and invest the rest." Assume that you wanted to purchase $1,000,000 in life insurance coverage. On a whole life plan, you may have to pay a monthly premium of $550.00. However, on a term insurance plan to age 65, the premium is much lower (175.00). That's a difference of $350.00.

On a whole life plan, the insurer invests a portion of the premium to build cash value, which only starts to accumulate after three years usually. However, if you bought term insurance and invested the $350.00 at 6%, you'll have accumulated $56,865 after 10 years. The cash value accumulation on the WL might be about $25,000 at that same juncture.

That is the foundation of the reason for the debate. Despite the facts, some persons still prefer cash value and others prefer term insurance. Many whole life plans are not client-friendly, so there is merit in being careful about them. They are usually more complex and have more fine print than term insurance. The latter is simple and clear in terms of benefits. A major problem occurs when clients get seduced into buying whole life and are not entirely sure about what they're getting into.

Whole life policy is more expensive, since the policy has cash value.
If you can afford, get whole life insurance policy. In case you are out of job, the cash value from the policy can pay the premium, and keeps the coverage for you.
If you get term policy, the policy will lapse if you are behind on the payment of premium.