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Aug 11, 2016 by |

California life insurance attorney: Whole Life


Do Whole Life Polices Cost Consumers More than they Make?

Whole Life insurance is one of the two main categories of Life Insurance, the other being Term. Whole life and Term Life are exactly what they wound like: the latter is only in effect for a set time span, while the former remains in effect until the policyholder dies. Whole Life Insurance makes up the bulk of the market, in large part due to a few bells and whistles that brokers claim are meant to benefit the policyholder. Namely, whole life insurance accrues a “cash value,” which means that it can double as an investment as well as insurance, kind of like an extra bank account. While this may sound like a benefit to a consumer, for most people it serves very little purpose and comes at a steep price.

Whole life policies have been known to cost 10 times as much as a term life policy that offers the same coverage, and the tax benefits that brokers try to sell has very little utility for anyone who doesn’t have a very high income. Because of the high commission that these policies earn brokers, they often sell them to consumer’s who would be better off purchasing a term policy with the same death benefit. Our California life insurance attorneys have seen numerous cases of brokers upselling policies that are of little use to their owners.

Despite this, many consumers end up being overcharged for whole life insurance, as brokers try to sell the peace of mind that having a single policy for the rest of one’s life is supposed to bring. Independent financial advisors will often tell their clients to buy term and invest the difference, instead of putting all of your savings and income into an expensive whole life policy, which is a very poor investment on its own.

Whole Life policies come with quite a number of hidden fees that are either not disclosed or buried in other charges. Between the commission paid to the broker, which can be as much as 10% of the cost of the policy, and 5% or so annually for management fees, whole life offers very little as an investment vehicle.

For consumers who are trying to be conscientious by buying life insurance early and planning for retirement, whole life insurance seems like a solid investment: long-lasting, cash value, and tax-deferment. However, it often functions as a dead weight, draining income that could be put to better use elsewhere.

Some of the major annuity and life insurance providers are:

If you or a loved one has been the victim of an improperly sold or administered whole life insurance policy, the California life insurance attorneys at Evans Law Firm can help you seek restoration. Our attorneys have experience handling life insurance and annuity fraud cases, as well as financial elder abuse and whistleblower cases. We can be reached at (415) 441-8669, or by email at

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