Thank you so much for blogging this. I have been telling people this for 6 years now and believe it or nor I sell life insurance for a living. You are to be commended.

I WAS SOLD THROUGH THE HORSEMANS ASSOCIATION a insurance policy a number of years ago , with the intention that it would pay, the funeral expenses for myself and my wife, i feel we were cheated because when i reached age 70 we received a letter to inform us that the policy was no longer valid and it expired at age 70, this was amajor rip of by the standardbred horsemans association and the insurance company, we were cheated, that is very bad business on their part, there are a lot of crooks in the insurance industry and there should be laws to make them clean up their act.

There's a lot of truth to this, but there is one advantage of universal life insurance (ULI) that the author neglected to mention.

With ULI, part of your premiums are put into cash reserves which are invested for you and accumulate over the life of your insurance. When you want to retire, there's a way to pay yourself those reserves tax-free. You can receive a loan, using the reserves as collateral, that you don't have to pay until you pass away. Remaining in place, only being used as collateral, those reserves continue growing as investments, which allow you to obtain more financing later on. This is one of the methods written in a national bestseller, "The 10 Secrets Revenue Canada Doesn't Want You To Know" (Voth).

One major problem with term life ins. It gets more expensive as you age, becoming prohibitive after 55! Most whole life premiums do not increase as you age.

I am 35 years old and my existing term life policy renews next year in May, at which time I was considering switching to a whole life plan. Now I am confused. Which is the better way to go??

If you aren't sure which insurance is best for you, get advice from a financial consultant. Before you accept any recommendations though, make sure they can explain the reasoning. I'm in this industry, and many of my associates take their commissions into consideration when deciding which insurance is best for you.

First of all whole life insurance isn't anything remotely like universal life. She groups them together and calls them as the same. They are totally different products. Does she have an underwriters license? No, than she needs to stop talking/giving advice about things she has little to no knowledge of.

If hipster Kerry doesn't even know this then she needs to keep ironmaning and leave the financial advise to real experts. There are many advantages to whole life insurance as there is for term. She has an opinion, leave it at that.

My experience is that all insurance companies are fraudsters and you'd have better chances with the lottery. Be smart and invest with something that is in you or your family's control, not a greedy insurance company who don't stand true to their word.

For most people Term is the way to go. Remember insurance is a bet. Insurance companies bet you are going to live and you are betting you will die before the term ends. The smartest thing to do is to take the difference between Term Life premiums and whatever an agent is trying to sell and invest it in a safe investment and you won't need insurance after 55. Usually the house is close to being paid off and the kids are out of school by then.

thanks to Alan for pointing out there are major differences in whole life and term policies. I have a whole (or "Universal") life policy, and I have had one since I was 25. I obtained it as a healthy young adult, and lucky I still am healthy at nearly 40. I have over $150,000 coverage and only pay $14 per month. My husband, on the other hand, is a smoker, and we can only afford a "term" policy and his premiums are double for almost half the coverage, AND he has to requalify for his policy every few years.
My policy is guaranteed for life regardless of what health obstacles I may face in the future. Term life does NOT work that way, because you continue to have to re-qualify. Please PLEASE make sure you investigate these types of requirements before deciding a such a huge investment.

Interesting blog, Kerry. I am an insurance professional for the past 26 years and agree with the "content" of what you are saying in all three points, except you leave out the proper "context" from your recommendations. You should use the following introduction to your comments; "This advice is meant for you if you still have any non-tax-deductible interest debt (mortgage etc.), do not yet have a 6-12 month emergency fund, and have not yet maxed out your RRSP and TFSA deposits."

Like any financial instrument, when used properly, Whole Life, Universal Life, Term Life, Mortgage Insurance, and Juvenile policies all have pleasing results. I do agree however that many representatives in our industry sell the wrong product at the wrong time, so I applaud your effort here.

I have been a financial advisor for 30 years and can tell you that this controversy has raged all during that time. It has been my experience that most opinions taking a stand on one side of this controversial fence or the other are usually leaving out a lot of important information that could benefit the consumer and therefore discredit themselves as advisors in the process. There are definite benefits to both term and whole life policies and your situation is going to be different than the person next to you. It's not just black and white. Any company, individual or anyone in the media for that matter who promotes one type of insurance, in all situations, to the exclusion of all others is to be avoided. Talk to a professional you can trust.

I bought a whole type policy when I was a kid of 16. The premium was $7.67 per month and it was to pay me $5000 when I reached 65. After about a year I was talking to the accountant where I worked and after a little figuring he said that it was not a very good deal so I cancelled it. It turned out to be a wise choice. In a years time I would be getting $5000 and over the years I would have paid nearly $4500 for it. It only confirms what I believe. Insurance companies are in the business of collecting premiums not paying out.

Everyone who considers themselves an expert or who has a conscience, will provide only a term insurance product as part of the complete planning process. What do you want at retirement? A lot of money or a lot of insurance? I applaud you for ,once again, exposing the truth. The client always comes first! Educate them with Term Insurance. Everything else is a "rip off".

I am an insurance professional and take offense at Kerry lumping Universal Life and Whole Life together. They are very different types of insurance. Depending on the situation they can both be great or terrible. Each circumstance is different. The client along with the broker need to figure out whats best for the client in their specific financial and personal circumstances.Whether its term universal or whole life. I recently had a client who wanted to insure her mortgage. As she was single I suggested that critical illness insurance woould be more appropriate than life insurance. KNOW THE CLIENT.

As some of the others, i am too a financial advisor for 20 years and some of your coments are correct but some are not. Take insurance on children for instance. A family who's parents are self employed or work where there is no benefit plan where they work, might find they need insurance on their kids to offset the coverage funeral expenses. This might be an amount $8000.00 and up that they don't have just sitting around in the bank account. Insurance Advisors are licensed and trained to show all options to their clients. 1 problem = 1 silution, not always the case

I have purchased several large policies so I am an insurance customer not an agent, but I have to say that the comments by the agents in this blog are more accurate that Kerry's.

Her statement that Universal (UL) and Whole life are the same is incorrect--UL is a simpler and usually cheaper product. Similarly, her assertion that Term is always (a lot) cheaper than UL is equally incorrect. In many cases, a minimally funded UL policy is the same cost or less than a level premium Term to 100 (T100)policy. The real issue with cost is this: If you intend to keep your policy until you die in your senior years, buy a level premium product--it is more expensive now but much lower cost later on. If you purchase a basic UL policy with level premiums before you turn 40, the premiums will be predicatable and manageable throughout your life--this will often yield a return of 5 to 6 percent (tax and probate free) for your heirs. On the other hand, if you intend to keep your policy in effect for a limited period of time (say 20 years)then go without insurance, buy term insurnace, but realize that you will likely get a zero return on your money. I would strongly discourage anyone who intends to keep their policy indefintitely from buying an non fixed premium product and I would also discourage overcontributing in the investment account that comes with a UL policy.

I can't agree that there are a lot of crooks in the industry, but I can say that there are some agents that don't know their products (and some very knoweldgeable ones) and many customers don't ask enough questions beyond premium cost.

Finally, when you are buying insurance for the long term, you nned to consider inflation over several decades. $250,000 may seem like a lot right now but by the time it pays out that could be the cost of an average car.

When my father passed away he had a large sum of money in RRSP's .....HALF went to the government!
Fortunatley, he also had a term life policy in place that paid out $150,000 tax free dollars, doesn't the government already recieve enough of our money?

I think term insurance will give most people the coverage they need. If your work company allows you to purchase group insurance, this term insurance is even that much cheaper than a regular outside insurance policy. It allows you to purchase much more for lot less cost. If you leave the company later in life, your cost will be higher to replace it but that in itself is just another risk to consider.

Term insurance? Yes. The right product for 99.9% of people ALL the time. Mortgage insurance? No. Use term life insurance instead. The REAL danger with mortgage insurance, like any credit life insurance, is that they only determine if you really qualify AFTER you die! Insurance on kids? Sometimes. If you have a family history of disease that might not allow a child to qualify to life insurance when they get older, get it while they are young and they can then own that policy when they get older. Also ..why turn a "personal tragedy" into a financial one as well? Get a small policy to pay final expenses and allow you to take a month or two off work to grieve. THE BIG QUESTION HERE IS HOW LONG WILL THIS BLOG BE LEFT UP BEFORE THE "POWERS THAT BE" (IE: BIG INSURANCE)FORCE THE HOST TO TAKE IT DOWN??