- “Term is renting; whole life is owning” — False analogy. You don’t “own” whole life; you’re locked into a expensive contract.
- “You need permanent coverage for final expenses” — A $15,000 burial policy costs $50/month. Don’t buy $500,000 whole life for a $15,000 need.
- “The cash value is like a savings account” — Savings accounts don’t charge 30% surrender fees or require 10 years to break even.
- “Tax-free retirement income” — Policy loans are tax-free but reduce death benefits. Not the same as Roth IRA qualified distributions.
Action Plan for 2026
If You’re Under 40:
Buy 20-30 year term life insurance for 10-12x income. Invest maximum in 401(k) and Roth IRA. By age 60, you’ll be self-insured through investment accounts.
If You’re 40-55:
If you have no life insurance, buy term to age 65 or 70. If you have whole life purchased years ago, keep it (sunk cost) but stop adding new permanent coverage.
If You’re Over 60:
Consider guaranteed issue whole life ($10,000-25,000) for final expenses only if you have no savings. Otherwise, self-insure through retirement accounts.