What is the differance in Term, Whole, and Universal life insurance?

My wife and I need Life Ins. I need to know the differance between the 3 ins. to make the best coverage choice.

Public Comments

1. Term is almost always your most economic option. Term means you pay $xxx for x # of years to be insured during that 'term' or period of time. If you don't die during that time, you get nothing and you part ways with the insurance company. It's a great option for making sure you're taken care of in the event of one of you dying when you have a mortgage (30 year mortgage?, buy 30 year term), if you have children (5 year old kid?, buy 15 year term). The other two options are permanent insurance, they have a cash value feature where you can take $$ out of it, take loans against it, and regardless of your future health you maintain the insurance. Universal is tied to an underlying investment--usually based on some sort of stock market index, etc. Insurance agents will push Variable Universal Life more times than not, because they make a killing off of it, and people like the idea of the savings aspect and the potential upside of the investment. You'd be better off buying term and contributing the premium difference between the cheaper term and the more expensive permanent insurance into a Roth IRA.
2. Read the two attached articles. Term will allow you maximumcoverage for an affordable price. It can be modified according to your finances. Depending on your age you should consider getting the longest term available- 30 - 35 years. Please, be sure that you get a policy that will cover your whole family, if that is your desire. By this, I mean you would be primary, your wife would be added on YOUR policy as a rider and your kids would be on as ONE child rider. Some would say don't add children because they don't bring money in. But will you have the money for funeral expenses and maybe 3-6 months off work, on hand and available? Why one policy? Because you will have ONLY one policy fee for entire family. Other companies put separate policies on everyone in the house. At $75 per policy, that is $300 for a family of four. Some here will say don't get term because it is like renting insurance. Do you rent your car insurance or home owners? Just like life insurance, in order to have a payout your have to crash your car or burn your house down. Well, you won't be paid if they find you burnt your house down. Life insurance works the same way. But instead of life insurance it should be called income insurance. You get it to replace your income, not replace your income and make lousy returns on an investment you can do on your own- mutual funds- 401k or IRA's.
3. Work with a professional to help you with your insurance and financial product needs. First, develop a game plan to help determine the TYPE and AMOUNT of insurance that you need. The amount that you need will change over your lifetime. Term IS the most economical. That does not mean that it is BEST for YOUR situation. Many factors will affect your insurance needs - your income, your debts, your savings, your health, your family situation and others factors. No one can recommend which insurance will be best for you without knowing these factors. Keep in mind that you CAN own more than one policy and more than one type of policy. I own both term and permanent. Good Luck. *
4. You can read everything about all 3 types here: http://finance1o1.blogspot.com Here's a brief summary about what that guy wrote in my own words: Whole life and universal life insurance are rip offs. You pay lots of premiums for the insurance. Both types build cash value, which is why premiums are very high. If you ever wanted to take money out, you have to borrow it and pay loan interest of 6-8%. If you die someday, you lose all the cash value. Term insurance is just basic insurance that doesn't build cash value. So premiums are much lower than the other two. Since premiums are low, you should be able to invest your money into mutual funds. I personally own a 30 year term insurance and invest $333/month into my Roth IRA. I don't plan to keep my life insurance in 30 years because I will have lots of money in my retirement account.
5. You need to determine how much coverage you need, what you can afford to set aside monthy for this. Once this is determined, then you can hopefully arrange coverage maybe utilizing a combination of the mentioned policies. Dont worry about it, they all cover you if you die, just some are cheaper, other one sometimes lapses if interest rates fall or loan amounts go too high, the last one is the mercedes benz of them all, pure class all the way..