Whole Life Insurance is a Scam

Whole Life Insurance is a Scam
There are numerous reasons why whole life insurance only benefits the salesperson who is earning a hefty commission from selling it. It is only a good choice in a very specific and narrow circumstance that would require you to have enormous amounts of wealth you are trying to pass on to your heir in a tax efficient manner.
Whole life insurance is significantly more expensive than term life. The cash value grows slowly. There is no flexibility to adjust the premium and there is limited ability to adjust the death benefit.
Part of the premiums you are paying for your whole life policy are going towards a savings component which is called the cash value. This piece is invested with a guaranteed return and can be borrowed against or withdrawn, tax free. However, you can almost certainly make better investment returns in the stock market with diversified and relatively safe vehicles like the S&P 500 or a target date fund. Do not commingle your life insurance with your investments.
There is really only one narrow set of circumstances where it could make sense to have whole life insurance. Whole lie is overpriced unless you have over $100 million and are targeting specific tax loopholes to transfer wealth to your heirs. Whole life insurance can bypass the inheritance tax
Whole life has some of the highest commissions for salespeople which is why they push it so hard.
If you need life insurance, consider term life insurance to cover the time period between when you don’t have a nest egg saved up and until your children are able to live on their own without your financial support.
Whole life insurance is really only good for the salesman that can make a quick and large commission by preying off financially illiterate people.
Works Cited:
https://www.investopedia.com/terms/w/wholelife.asp
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