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Should We Choose Term or Whole Life Insurance?

In this week's Arista Advice, Paul L. Moffat of Arista Wealth Management compares term and whole life insurance and provides a guideline you can follow to see which one is best for you.

Full Transcript:

Hello, welcome to this week’s Arista Advice. Hope you’re well. For my dear friend Troy who says I need to lose the tie, well I've lost the tie today.

Question of the week is - Paul, should we choose term or whole life insurance? Well, that's a terrific question, and it depends, and it's very personal. Let me share with you some statistics and some information that may be helpful to you.

Term insurance is temporary purpose. It's like renting a home. It's like leasing a car. You buy it. You have it, and if something happens it's there to protect you. To the contrary, you have whole life insurance. It's permanent insurance. It's a little more expensive, but there is a stock market participation involved in the calculation. That calculation and that growth is called cash value. 

Term policy you get lengths of periods. Also, it generally stays the same. The premiums are lower, and life insurance payout amount is always guaranteed. 

Over on the other side with the whole life insurance, it provides a lifelong coverage. The payments will also have some stability for you. 

So if you choose term insurance, you need to replace your income for a certain period of time. Number two, you want the most affordable coverage. Number three, you might want permanent life insurance but can't afford it. Also, most term life policies have a conversion provision inside them. Then if you want to discuss whole life policies, you are a great candidate if you want to provide money for your heirs to pay estate taxes, you have a life-long dependent that will always be dependent upon your income generation, and three you want to spend your retirement savings but still want to leave an inheritance. 

As you can see life is uncertain. None of us know when we will leave this life, but it's important to have some type of discussion about long-term planning done and completed. So reach out, give us a call, speak with those that are around you, speak with your loved ones, and discuss what is best. We'd be happy to be involved in those conversations.

Hope you’re well. Have a great week, and we look forward to talking to you soon.