đź’° Why Agents Push Whole Life
Whole life insurance pays agents 50-110% of first-year premium in commission. Term life pays 30-50%. That's why you'll hear "whole life is an investment" so often.
Term Life Commission
$100-200
on typical policy
Whole Life Commission
$3,000-6,000
on typical policy
The Math: Whole Life vs Term + Invest
30-year-old buying $500,000 coverage:
❌ Whole Life
- Monthly premium: $500
- After 30 years paid: $180,000
- Cash value at 65: ~$150,000
- Death benefit: $500,000
Cash value return: ~2-3%/year
âś“ Term + Invest Difference
- Term premium: $35/month
- Invest the $465 difference
- After 30 years at 7%: $560,000+
- Term expires, but you're wealthy
Market return: ~7%/year historical
Difference: $410,000+ more with "Buy Term, Invest the Difference"
When Whole Life Actually Makes Sense
Whole life isn't a "scam"—it's just wrong for 95% of people. It may be right if:
- âś“ You've maxed out all tax-advantaged accounts (401k, IRA, HSA)
- âś“ You have a taxable estate (over $13M per person)
- âś“ You need permanent insurance for estate planning or special needs trust
- âś“ You want forced savings (can't trust yourself to invest)
- âś“ You're buying from a low-cost company like TIAA or Vanguard (not agent-sold)
Common Whole Life Sales Tactics
"It's an investment that protects your family"
Reality: It's a mediocre investment (2-3% returns) combined with expensive insurance. Do both separately and come out ahead.
"Term is throwing money away"
Reality: You're buying protection for when you need it. You also "throw away" money on car insurance and don't complain when you don't crash.
"You can borrow against the cash value"
Reality: You're borrowing YOUR OWN MONEY and paying interest on it. With term+invest, you just withdraw your money.
"What if you're uninsurable at 65?"
Reality: If you've invested the difference, you'll have $500K+ in the bank. You don't need insurance—you're self-insured.
The Bottom Line
Whole life isn't a scam, but it's wrong for most people. The math clearly favors buy term and invest the difference. Whole life exists because it pays agents 10-30x more commission—not because it's better for you. Unless you have specific estate planning needs and have maxed out all other options, stick with term life.