What are the REAL benefits/downsides of whole life insurance? My TikTok is flooded with these finance gurus trying to sell it and are saying all kinds of stuff that sound sketchy like infinite money loops and whatnot
In: Economics
Real benefit: you have life insurance for your whole life as long as you pay premiums (whole life). A cash value account.
Downside: higher premiums (compared to term) in the beginning. a part of the premium goes towards saving (something like savings account or mutual fund) and rest goes towards actual insurance (mortality rate). The idea they are promoting is you can borrow this cash value at a later point. There are administrative fees baked in. Not meant for short term.
fun fact: agent commissions are higher for whole life insurance hence these gurus push for it, sometimes 80pct of the annual premium.
Alternative: buy a term life and invest rest yourself in mutual fund or index fund.
eg: whole life can be $4500 per year, term can be $1200 per year (all depending on age, length of insurance etc).
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