Is Whole Life Insurance a Good Idea?

Is whole life insurance a good idea? Most of the time, it does NOT make sense. Today we are breaking down what you should know about whole life insurance.

Is the decision to purchase whole life insurance a good idea?

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Full transcript:


Anthony Saffer & Alex Okugawa

Alex Okugawa 0:00
Is whole life insurance a good idea? Today we’re breaking down what whole life insurance is, and why this decision to get the insurance or not, can have a big impact on your future. Stay tuned.

Okay, Anthony, so let’s just kick it off. What is whole life insurance in general?

Anthony Saffer 0:20
Yeah, whole life insurance is meant to cover your “whole life.” So it’s more of a permanent policy, as opposed to “term” life insurance, which is set for a designated amount of years.

Alex Okugawa 0:29
Now, in general, we’re not the biggest fans of whole life insurance. And the biggest reason is, for the amount of death benefit coverage that you get, the premiums can be really pricey.

Anthony Saffer 0:42
You generally pay more than term, about 2.5-3x more than term. So you’re paying for the insurance, but then you also have a sidecar “cash value”, which is like a savings account on the side.

Alex Okugawa 0:54
Now, there are a few circumstances in which I’d say whole life insurance can make sense. So it doesn’t, not make sense for anyone, right? But the circumstances have to be very specific. So let me give you an example. Let’s say you have a really strong pension, and you’re married. So let’s say one spouse, when they die, that pension goes away. Well, if they pass away, that’s going to leave a big hole in the financial life of the surviving spouse. And depending on how long you live that need might be for a long time. So in situations like that, whole life insurance can make sense, but you have to look at each situation very uniquely.

Anthony Saffer 1:36
I get bugged a little bit when people say it’s “never” a good idea because it’s not necessarily true. The pension idea, if someone’s terminally ill, and they want to convert their term policy over to a permanent policy, that can make a ton of sense, because you’re not going to qualify for other insurance. However, most of the time, especially when you’re in the accumulation years, you’re preparing for retirement, when you got kids in the house, term insurance is the best way to get good coverage for a cheap price.

Alex Okugawa 2:02
Because then you can save that extra premium, the premium that you’re not paying because it’s a lot cheaper than whole life. You can take that savings and then invest in your 401(k)or IRA retirement savings,

Anthony Saffer 2:14
It’s more efficient to do it that way. There are more fees that are wrapped up typically in a life insurance policy. And so yeah, you think “Oh, I’m getting the insurance I’m saving.” So yeah, it can be productive. It’s just wrapped in a lot of fees and other stuff.

Alex Okugawa 2:14
Keep your insurance, your insurance, keep your investments, your investments. And like we just said, you know, each situation is so unique. And that’s why when people come to us, we’re looking and saying what are your needs? Maybe whole life insurance does make sense for your specific need, most of the time, it’s cheap term insurance, but this is the kind of stuff that we help folks with when we look at their unique situation. If you’d like to learn more, you can visit our website at and schedule a quick 15 minute call. We’d love to talk with you.

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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. See our website at for full disclosures.

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