Is Whole Life Insurance A Good Bond Alternative? (It Depends.) You Have to Qualify first

When it comes to Life Insurance, peddlers of life insurance, in their effort to get people excited about it, tend to forget that people have first QUALIFY for life insurance.

In the real world, not everyone qualifies for whole life insurance; one of the reasons you’ll see me recommending Universal Life Insurance is that it’s a far better alternative to TERM life insurance.

In a nutshell, universal Life insurance is structured similarly to term insurance, the difference being that it’s UNIVERSAL and does NOT expire as Term Life Insurance does.

However Universal Life Insurance has the problems you’ll find in a Term in regards to PREMIUMS. If you get a horrible insurance agent who sells you a Universal Life Insurance policy, they’ll likely play down the reality that the moment you hit around 62 years old, your insurance PREMIUMS will skyrocket, which is exactly what happens with term life insurance.

Whole life insurance, namely dividend-paying whole life insurance, has a level premium, so if you’re paying $30,000 annually, that cost remains the same for your WHOLE LIFE.

This level of premium is why whole life insurance is often compared to purchasing bonds; however, all you need to qualify for a bond is a pulse and some money; with life insurance, especially when you get into the multi-million dollar policies, you might have to do a medical, and you could be DENIED coverage.

With that said, IF you qualify, I’d pick a Whole Life insurance policy over a bond any day of the week, but life insurance has CAPS, so those of you with a lot of money will have to be creative when you reach your whole life insurance limits.