The MapleMoney Show » How to Spend Money Wisely » Insurance

The Differences Between Term and Whole Life Insurance, with Sa El

Presented by Willful

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

Do you feel confident that you have enough life insurance, or do you avoid the subject at all costs? Unfortunately, too many Canadians either don’t have enough insurance, or they’re paying too much for the coverage they do have.

This week, my guest is Sa El, the co-founder of Simply Insurance, and a licensed Insurance Agent with over 11 years of experience in the industry. Sa joins me to discuss the differences between term and whole life insurance and why life insurance so important for your family.

According to Sa, 49% of life insurance policies purchased in Canada are whole life policies, and he sees this as a problem. Not only is whole life a highly complex product, but it’s also much more expensive than term insurance, which is affordable and suitable for the vast majority of Canadians.

Sa and I discuss the fact that too many people procrastinate when it comes to insurance. Sa believes they don’t understand that you’re not buying it for yourself; you’re buying it for your family members. After all, they’re the ones who are left to pick up the pieces after you’re gone, so it’s not something you should be putting off. Before you get a life insurance quote, listen to this episode!

This episode of The MapleMoney Show is brought to you by Willful: Online Wills Made Easy. Did you know that 57% of Canadian adults don’t have a will? Willful has made it more affordable, convenient, and easy for Canadians to create a legal will and Power of Attorney documents online from the comfort of home.

In less than 20 minutes and for a fraction of the price of visiting a lawyer, you can gain peace of mind knowing you’ve put a plan in place to protect your children, pets, and loved ones in the event of an emergency.

Get started for free at Willful and use promo code MAPLEMONEY to save 15%.

Episode Summary

  • Term life insurance explained
  • How whole life insurance works
  • Is whole life the same thing as permanent life insurance?
  • Why Sa is not a fan of whole life insurance
  • The reasons people procrastinate when it comes to buying insurance
  • How much insurance should you get?
  • Life insurance is more important than your Netflix subscription
Read transcript

Do you feel confident that you have enough life insurance? Or do you avoid the subject at all costs? Unfortunately, too many Canadians either don’t have enough insurance or they’re paying too much for the coverage they do have. My guest this week is Sa El, co-founder of Simply Insurance and a licensed insurance agent with over 17 years of experience in the industry. Sa joins me to discuss the differences between term and whole life insurance and why insurance is so important for your family.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. This episode of the Maple Money Show is brought to you by Willful. Did you know that 57 percent of Canadian adults don’t have a will? Willful made it more affordable, convenient and easy for Canadians to create a legal will and power of attorney documents online from the comfort of home. In less than 20 minutes, and for a fraction of the price of visiting a lawyer, you can gain peace of mind knowing you’ve put a plan in place to protect your children, pets and loved ones in the event of an emergency. Get started for free at and use the promo code, Maple Money, to save 15 percent. Now, let’s chat with Sa…

Tom: Hi, Sa. Welcome to the Maple Money Show.

Sa: Hey, what’s going on, Tom? Thanks for having me.

Tom: I want to hop into something I’ve heard a lot with insurance but never fully understood. It’s this idea of what’s better, term life or a whole life insurance? I went with term life insurance myself but I kind of just did it as this blind rule. I heard term is best so I went with that. I didn’t put a lot of research into it, I’ll admit. I kind of want to break this down and see if I made the right choice and if other people are making the right choice. First of all, I was wondering if you could dig into these two things a bit to make sure we understand what they are. What is term life insurance?

Sa: I like to put stuff in plain English. Term life insurance is just the protection against the loss of life for a certain amount of time. The way it traditionally works is that you can get term life insurance for a 5, 10, 15, 20 or even a 30-year term. These term lengths were created so you could basically live your life and the term length would end once you were pretty much done. With 30-year terms, they’re like 30-year mortgages. You won’t need $200,000 in 30 years. Your house should be paid off. If you have kids, they should at least be 30 years old. If you had a 20-year term, your kids would be 20. The amount of coverage you would need at a later date is not going to be the amount that you need starting off. That’s the concept of a term policy. They only last a certain term length. At the end of the term, you have to either renew the policy or let the policy lapse. However, if you decide to renew, those premiums are going to be really, really high. That’s just the honest truth. Usually, people don’t renewal them. They usually get a smaller whole policy later in life. But that’s pretty much a term policy unless you get what’s called a return of premium rider where you don’t get any premiums back once you pay into the policy. It’s like being covered for 30 days. You pay your monthly premium and they cover you for 30 days. If you stop paying, you’re not covered. That’s pretty much how term life policies work. If you die, they pay out during that certain time period. With a 10-year term policy, for instance, a lot of times people get kind of confused, asking, “Do I have to live for 10 years for the policy to pay out? Or will it pay out during the 10 years if I die?” Which is a really common question. It might seem crazy when you think about it, but term life insurance only pays out if you pass away during the term. After the term, the policy is over. Term life policies are usually going to be much more affordable on a monthly basis than a whole life policy. And that’s mainly because they’re very simple. The insurance company knows they’re only going to insure you for a certain amount of time so the premiums are lower. And the risk is usually lower for them as well so that’s why the premiums are much lower compared to a whole life.

Tom: Term life insurance, to me, seems like you’re insuring against anything that’s a financial catastrophe, almost like it’s no different than car insurance. It’s like saying, “I’m going to get car insurance this year and it’s going to cover me if I’m in an accident.” Is it that same basic idea, that you’re just insuring against the worst-case scenario?

Sa: Yes, you’re definitely insuring against the worst-case scenario. That’s pretty much the idea. I think when people think of life insurance, that’s what they think originally. They believe if they buy something and pass away, it pays out to my family. That’s how simple term life insurance really is. You tell me how much coverage you need, I tell you how much it costs. You say how long you need it for, and there you have it. Pay your premiums. We’re good to go. That’s simple as it should be.

Tom: So let’s get more complicated. Can you explain what whole life or “permanent” life insurance is?

Sa: Whole life insurance is a type of permanent life insurance. A lot of people call them the same thing but it’s really “term” life and “permanent” life. Permanent life insurance has other things like universal life insurance, whole life insurance, variable life insurance—different types of insurance under it. The reason people use it interchangeably is because most people get whole life policies. They say it’s whole life but they don’t say it’s really permanent. Whole life insurance is a type of permanent policy. Just to clear that up.

Tom: Yeah, yeah, definitely. I just did use them interchangeably.

Sa: Personally, I’m not a fan of a whole life policy for at least 95 percent of the population. Whole life insurance is going to be much, much more expensive on a month-to-month basis. That’s because they know (for sure) they’re paying out your death benefit. So they’re getting ready by charging you a ton of premium. I have $2.5 million in life insurance on a 30-year term and I paid $168 a month for that. If I tried to get the same coverage in whole life insurance, I can assure you to be in the thousands and thousands of dollars a month, easily. It’s just so much more expensive. And then on top of that, it becomes a complicated product. It becomes trying to make moves that normal people like me you probably aren’t really interested in making. And especially the average person—the average Canadian, the average American. They’re not just sitting around saying, “I need my whole life insurance policy to be an investment.” They think they’re just buying something to protect their family. That’s what makes the whole life policies even more complicated because they can be used as tax instruments and it just becomes more of a complicated thing. And unfortunately, in Canada, it’s weird because one of the carriers (they represent out there) just released a study showing that 49 percent of Canadians, when working with an advisor are purchasing a whole life insurance policy. That’s not good because a 30-year-old does not need $250,000 whole life policy. It just it makes absolutely no sense. You’re going to pay $250 a month for a $250,000 policy when you could have been paying $25 a month for the same policy with a 30-year term? That’s what’s happening. Whole life insurance policies pay out no matter how long you live. It doesn’t matter how long you pay into the policy, it’s going to pay out. You can draw against a whole life policy. You can take the premiums out of it. A percentage of any monthly premium going towards the policy is called the policies cash value. You can borrow against that cash value as it grows over time (which I would never recommend). But that’s one of the features of this type of policy. You can pull money out of it. And, if you turn the policy in, you can cash in. There are all kinds of things you can do with it and there are ways it can pay out. But honestly, it just becomes a complicated product. If you’re a middle-aged person and you have a family, you’re not thinking about whole life insurance. You’re thinking about term life insurance because it’s affordable. It’s easy to understand and it pays out when you need it to pay out. And if you outlive it at that point, you won’t need that much coverage anyway. That’s the way it was set up.

Tom: Yeah, you’re right. That certainly sounds complicated. With whole life—I know you’ll correct me if I’ve got this wrong… But I think you only pay up to a certain amount of time. You don’t pay until you die, right? Is there a certain amount you pay into and then you’re free of payments in the future?

Sa: There are different types of whole life policies. Some are called, 10-pay, 20-pay, single-pay or life-pay. Single pay is where you say, “Hey, Tom. You can get $250,000 in whole life insurance for $100,000 in cash up front. You pay that one time and the benefit amount will be $250,000. You will be good-to-go and you never have to make another payment for that policy.” You won’t find too many people doing single pay whole life insurance. Ten-pay and 20-pay is pretty much the same thing. You’re paying your monthly premiums over 10 years. You’re going to have an even higher premium than a whole life insurance policy normally because you’re trying to get it paid up over 10 years. It’s the same thing with 20-pay. It’ll be cheaper than 10-pay, but you’re paying it up over 20 years. And then they have life-pay. With life-pay, you pay until you’re 99 years old. It’s the lowest premium but the problem with those policies is, depending on what age you get them, you can’t end up paying more into the policy than it’s worth when you pass away. So you have to be very careful with those policies. That’s what you’ll usually see with final expense, whole life insurance, senior insurance—that type of life insurance. Depending on their age, with those policies, the person can end up paying more into them then they’ll be worth when they pass away so the timing is important with those types of policies.

Tom: I would have to think as an insurance company, when you’re offering whole life insurance is that even though you’re taking money from the customer, you have to invest it so you can make sure you’re going to make more than what they’re paying. And that’s with the added risk they could die next year. So it’s like an investment where the insurance company is taking all the risk unless they’re just charging so much more than a regular investment that they’re statistically going to come out ahead.

Sa: Yes, that’s definitely what it is like. They’re definitely charging a lot of money for these policies and they are heavily investing those premiums you pay. They’re making it count. That’s kind of how that works for those guys. One thing that I do want to hit on too is, between those two policies—the whole life and term policies, it’s very important to make sure whatever policy you purchase is a policy you can comfortably afford to pay on a monthly basis. I can’t tell you how many times people buy whole life policies because they want it to last their whole life and they can’t keep it because they can’t afford it. Always be sure to get what you can afford. If you’re looking at yourself and saying, “Hey I don’t think I can afford $30 a month,” that’s okay. Get the $15 a month policy because there are $15 a month policies out there. I think that’s important. Having sold insurance for more than 12 years, I cannot stand when I hear people say, “I’ll just save.” You’re not going to do that. You’re not going to save. It’s not happening. In the States, the average person doesn’t have $3,000 in their bank account. You’re not going to save for life insurance. That’s just not going to happen. Let’s just be honest. You might want to save. You might think you’re going to save. But I promise you, the last thing you’re going to save for is life insurance. Nobody’s going to say, “Oh yeah, that’s my life insurance savings account. I’m saving for life insurance.” Nobody’s doing that. And most of us won’t be able to do that. Let’s just be realistic and get these small policies. They’re not expensive and they’re very important.

Tom: I get your point that no one is likely to do that, but they’d still probably be better off doing that than getting into whole life then, right? Because whole life feels like savings but if you suddenly realize you can’t afford that much a month you don’t really have a backup option. If you were able to save in the normal account for a year, you’ve got something to show for it if things go bad a year later. I don’t mean to downplay it. But just financially, you can no longer afford that savings. But with insurance you’ve got to keep paying that.

Sa: Yes, you’re absolutely right about that. They would be better off. And, if people had the ability to save, that would be a great thing. It’s crazy because for a long time we’ve always been told to buy term and invest the rest. What they’re talking about is, see how much it’s going to cost you to buy a whole life policy for the same term life policy. Buy the term policy and invest the difference of what the whole life policy would have been into whatever type of investment instrument you choose. That would be better than buying a whole life policy. That’s another thing people have done. If you could save the money without the risk of losing it, then yes, it’s probably better than just getting a whole life policy. Especially if you’re a young person. If you’re not a high net worth person, it starts turning into a question of what you’re spending all your money on?

Tom: The whole, invest the rest thing is what led me to my decision to get term life insurance. I didn’t really do “invest the rest.” I didn’t look at what the whole would be and do exactly the difference. I realized I was better off investing everything I could instead of going into whole life insurance. I didn’t do it mathematically but I definitely got the idea I could certainly use this money to invest instead and probably come out ahead. Now, all of this kind of comes down to the idea of, “When am I going to die?” Is it next year? Is it when I’m 100? I’ve seen a lot of people that will defend something like whole life insurance, but also other things like life insurance for children or cancer insurance—really specific things. Whenever someone defends is always because they’ve got an anecdotal story where they say, “I know someone that died two years after getting this insurance and it was the best thing ever.” I understand that but that’s just now how most situations play out, I assume, right?

Sa: My thing is this… I say, get insured. Always have insurance, even on your kids. And the reason why I say that is because children’s funerals cost. I’m not trying to be funny, And kids do die. It’s weird but when you look at the age that some kids die, it’s scary. There is so much stuff that can happen. And the thing about kids, is they too, can pass away. And if you don’t have a life insurance policy, the average funeral for a child is probably $3,000. Most people just don’t have $3,000 to spend. That’s why you get all of these Go-Fund-Me accounts and people saying, “Help me pay for a funeral,” because people they’re just not thinking. They don’t think they’re 18-year-old needs life insurance. They don’t think their 15-year-old needs life insurance. They don’t think their three-month-old baby needs life insurance. Life insurance really isn’t for us. I tell my friends that all the time because the biggest problem with life insurance is procrastination. Nobody wants to do it because nobody wants to think about their death. But the biggest thing is procrastination. And they’re procrastinating because they don’t really, truly understand the purpose of the life insurance. You didn’t buy life insurance for you because you’re not going to be the one receiving it when you die, right? You’re buying life insurance for the people we’re leaving behind. Who am I leaving behind? That’s who’s going to need the life insurance and that’s who I’m buying it for. If we think of it that way, it will be an easier thought process because now you’re not thinking about, “Oh, I’m going to die.” You’re thinking about, “Hey, what happens to my wife? What happens to my spouse? What happens to my husband? What happens to my kids if I pass away? What situation am I leaving them in?” You start thinking more like that versus, “Oh, I don’t want to think about death. I’m never going to die. I’m immortal…” You don’t want to turn into that type of person but that’s what happens. It’s not for you. You’re not buying it for you. I’ve had customers that say they need to get life insurance for their son because he’s to college. It’s a smart thing to do because they know they’re on the hook for thousands of dollars in student loans and if he passes away while he’s in school, they want to be able to pay the loan off. It makes so much sense. People are using life insurance for that. And that’s a smart way to use life insurance. But a lot of people don’t use it that way. There are so many things that getting a life insurance policy and having it protect your family makes it the most important thing. That’s all it really is, protection for the family. Life insurance is intangible. We can’t touch it. We can’t watch it like our streaming Netflix show. You can’t do anything with it. But just know it’s there. So that $30 a month might seem like it’s burning a hole in your pocket. But trust me, if your family had to decide on what they would like to have access to when you pass away—your Netflix account or a life insurance policy, I’m pretty sure they’re going to say they would prefer a life insurance policy.

Tom: Yeah, it was an easy decision for me when I first got life insurance. We had our first child on the way and we were moving into a house. The combination of those things made me think, “Well, what happens if I die?” My wife is staying home with our first kid. I was the only income. We had this brand-new, hefty mortgage and a child on the way so it became an obvious choice where I wanted to make sure I was at least insured enough to cover the whole mortgage. I think I also included a few years of income. I’ve since upped it because I had someone explain this to me better where it made me wonder if I were really okay with only two years of income—whether that would be enough.

Sa: Yeah, I always tell people to think of term length. It’s how long you want the coverage to last. You might say you want a 20-year term but how much coverage are you going to get—the multiples. Are you to do 10 times a multiple? What are you going to do 20? A lot of people in the industry say it’s 10 times the multiple. I always say to do as many multiples as you can. If you can do 20, do it. That means, if you can do 20 times your annual income, do that because every multiple you use is how many years of coverage you’re going to have. If I do 20 times my annual income and my annual income is $100,000 a year, then my family is good because they got 20 years of $100,000 a year to take care of themselves. That’s how I look at it. It is very important to have enough coverage and to increase your coverage because like you said, lifestyles and situations change. If you get a higher mortgage, kids are going to be going to college… You just have to think about all of those little things that make you say, “Okay, who can survive two years on $100,000? Of course, there are people that can do that because everybody will have X, Y and Z. But the average family doesn’t have that. The average family still needs to make sure there’s money for daycare, money for college, money for the mortgage or to pay the home off. Or to pay the cars off if they’re on credit. There are a lot of things that go into it so it’s very important to make sure you get enough coverage to cover a good amount of time. Just say, “Hey, if I went away, how many years would I want my family to be okay getting that was relatively the same annual salary?” And if you do that, it should tell you how much coverage you need to get.

Tom: You mentioned the idea of insuring your children. I had always thought that wasn’t a great idea but I’ve often admitted that I only look at things from a pure numbers standpoint. And to me, it was like, “Well, there are funeral costs but just get it from an emergency fund.” But you pointed out how poorly people are doing with saving. And if people aren’t saving, you can’t just say, “Oh, I’m going to do it eventually.” I understand that. How often, though, does that make sense in the end? Does it cost a lot of someone just wants to insure their child for something like funeral costs?

Sa: No, actually, most term policies come with an option to add what’s called, a child term rider to them. You get any children up to the age of 18 on your policy. And usually it’s one set amount. It may be something like $10 for any amount of kids you have. And you can always add them (as they’re born) to the policy. The cool thing about that is that it’s not expensive. Let’s say you went and got a term life insurance policy and your wife or spouse go a term life policy. Rates for women are always more affordable—that’s the truth. If it’s a husband and wife thing, your wife’s rates are going to be much cheaper so you can put the child term policy on her policy because it’s going to be much cheaper. If your relationship with your spouse are those of the same gender, that’s perfectly fine. Go with the person that’s the youngest, because the youngest person is going to get the most affordable rates. That’s the person you would use to put the child term rider on. Child term riders are easy. A lot of times you see people trying to sell whole life insurance for children and that’s where you get a lot of the pushback, “Do I really need this Gerber whole life policy for my baby?” That’s where you get a lot of pushback from. Just adding them to the child term rider or getting a term policy on them is very simple. It doesn’t have to be complicated and it’s not super expensive. But I definitely think it’s necessary. Like you said, especially for people who are just saying, “I will always save,” or, “I will do a Go-Fund-Me.” It’s just unrealistic. I always asked my clients, “What made you start looking for life insurance?” because the answer, to me, is important. And the stories out here would be amazing. This one lady said, “My sister died and her body is still at the morgue. It’s been two weeks and we don’t have the money to bury her. I don’t want to leave my kids like that.” There is stuff like that we don’t think about. It’s very big and it’s sad but it happens all the time. And it’s for a product that really hasn’t been used to help put people in better positions as much as it has for others. Life insurance is a product that if you really knew it and knew how to use it in the correct way, especially in the African American community… I never had a conversation with my dad or my mom about insurance until I became an insurance agent. I told them, “If you don’t have life insurance, I won’t be showing up to your funeral.” I just think it’s an irresponsible thing. They have life insurance, of course. It’s just one of those things where I look at the situation and see so many people who don’t have life insurance, who don’t even know about it and are not educated about it. If you don’t know about it or aren’t educated about it, you can’t use it to help push your family ahead. Sometimes people say, “I don’t need to push my family ahead,” but it’s not even always about that. It’s really about keeping the same path they were on. What happens with that? Can they keep straight? Do they get kicked out of school because they couldn’t afford books anymore? That’s the biggest thing—let’s keep normalcy because guess what happens? You pass away or if your wife passes away or your baby passes away, with the amount of stress and grief, the last thing you want to be thinking about is money. That’s the last thing you want to be thinking about. And you definitely don’t want to be thinking about not having any money. Everybody reacts differently but nobody wants to be in a position where you have to wonder how you’re going to bury someone. They’re sad, grieving and they still have to talk to people about it—it’s just sad. It’s too much. I’ve seen what happens with people who don’t have life insurance. They’re stuck. I’ve seen experiences too, where my uncle passed and my aunt was able to get everything taken care of without a problem. And that’s important because grief is crazy. It’s crazy. You don’t know how you’re going to react. You know how it’s going to affect you. But what happens if you’re so grief stricken that you can’t work for a year? It’s only you and there is no life insurance. What do you do? I think about stuff like that all the time.

Tom: Again, that’s why I got insurance. I couldn’t imagine my family having to deal with something happening to me, questioning, “Do we have to move out of this house? Where does the income come from?” You mentioned the really sad scenario of someone not being able to even pay for a funeral. But if you’re throwing on top of that the fact you may also not have a place to live—that gets pretty heavy. It’s definitely worth the getting the insurance.

Sa: Definitely. It’s worth it 100 percent. It’s a very big proponent for getting life insurance.

Tom: The only other question I had was why does whole life get promoted so much? Is this like a commission problem? Is it just because it’s more profitable? Just like when you go to a bank and get offered a really crappy mutual fund, is it kind of the same thing?

Sa: Yeah. Insurance agents get paid crazy good. There are two ways you can get paid as an insurance agent. You can get paid an “earned” commission, meaning you get paid when the customer pays. Let’s say my contract is 100 percent of first year premiums and 5 percent of all the rest of the premiums for the rest of your life. The first year I get 100 percent of your premiums. So when you pay your $50, I get a $50 commission check. There’s also what’s called an “advance” where the insurance company says, “We’ll advance you 9 months on that.” So you pay your $50 and I get advanced 9 months of $50 in a week. Just think about how fast you can generate commissions and then look at whole life policies. Let’s say you get a $300 a month whole life policy at 120 percent commission and a 5 percent commission split regardless of whether it’s an advance or earned, it builds up fast. And over time, if you sell life insurance for 10 and have 300 clients who are all paying $300 a month and you get a percentage of that? You never have to work for it because you get paid in renewals. It’s a very, very lucrative business. It’s the advisers, misinformation, and a lack of education that people have when it comes to life insurance. Those are the biggest reasons that so many people are pushing whole life onto people who don’t need whole life. Once you’re educated, it’s hard to push it on you. But it’s hard to explain too because the average person isn’t going to want to hear about investments and life insurance. They just there to talk about what happens when they die. The biggest thing with whole life insurance is that there is a lot of money in the space, but there’s also a lot of misinformation. And it’s one of those things where some people are just set in their ways and think whole life is the best option for a family member. That’s why I think when the 49 see advisers—these advisers probably either believe in the product or just want the higher commission. It’s the truth. Do I sell a policy that’s $30 a month? Or do I sell a policy that’s $250 a month? Which one would you want the commission on? If I can convince this person— not in a bad way because it’s not necessarily a bad thing that’s not going work for you. It’s not that they’re not being ethical. It’s just that they’re saying, “I can still give this person what they need and make more money.”

Tom: Then there’s even someone that thinks they’re helping because they were trained by someone passing this down as a great policy. And there is that little hint of bias in the background where you’re sure you’re helping the person but making more money definitely helps you go in a certain direction. Thanks for being open about that because I think it’s a good point. Hopefully, this episode will help people educate themselves before they go into this. That way they know what they want because an adviser, in the worst case, may not have your best interests in mind at all. And on the middle ground, they just might not know. They might have been trained that this is the policy to sell.

Sa: Exactly. And that’s the thing. Do some online research. It doesn’t take long. It tells the content. There is a ton of information out there. Insurance education is very, very important. I wish they taught it in schools because then people wouldn’t come out of school not knowing about insurance. Of course, we need to get some credit card education in there first but if we could squeeze in insurance, that would be great too. Knowing how these things work is more important now than ever. If you can come out of school knowing how it works, you’ll understand the importance of it and won’t make bad decisions. I’ve had customers that get prescriptions who don’t have health insurance but their spouse has health insurance. Their spouse has a medical condition. They get prescriptions for their medical condition from the doctor and now they can’t get life insurance, “I took my diabetes medication but I got it from my spouse.” Well, first of all, your doctor never should have done that. You can’t ever submit your application to insurers because it’s just such a bad thing. But there are situations some people are in I definitely understand. But if your doctor gives you a prescription, do not fill it. Not, don’t take the prescription, do not fill the prescription. Because when the prescription gets filled, you take it according to the script intel. So, if you’re unsure about taking it, don’t fill it. That’s the most important thing. Don’t fill it and say, “I’m not taking it,” because it can affect your life insurance premiums. Just don’t fill it. Tell your doctor you don’t feel comfortable with this medication. Don’t just fill it and never take it. That’s an important thing.

Tom: Interesting. I didn’t even think of that. Is there anything else that we haven’t covered you wanted to mention about comparing these two?

Sa: Yes. One thing I did want to talk about was what determines premiums. I think a lot of people get confused about why their rates are what they are. And this is for both term life and whole life. Pretty much the same things are used to determine your rate. You’re looking at your age. All things being the same, the younger person is going to be more affordable. The younger you are when you buy your life insurance policy, whether it’s whole life or term life, the better your rate’s going to be. They’re looking at your gender. Are you male or female? Rates for women are always more affordable because it’s been statistically proven that women live longer than men. Because women live longer than men, their rates are more affordable. Then they’re going to look to see if you’re a tobacco user. If you use tobacco, you can expect at least a 60 to 70 percent increase in your monthly premiums whether it’s whole life or term life. Tobacco usage is very bad for insurance. It’s bad for other reasons but it’s definitely bad for insurance. The cool thing is, if you’ve become a non-tobacco user between 12 and 24 months most insurance companies will consider you a non-tobacco user. So, if you quit smoking for two years, you can new rates at non-tobacco premiums. Just reapply. I definitely recommend it. That’s a big thing because the premiums can get completely out of hand with tobacco usage. Height and weight is another one. That’s something that a lot of people end up losing money on because they don’t go back and adjust their premium policy when they lose weight. If you were a standard health rating because of your height and weight and you get down to a preferred healthy weight, because of your height and weight, you should go back and get another policy to lower the premium. I always recommend that. I’ve had people call me back in 6 months because they want to take a medical exam again to get the lowest rate. They were five or six pounds over the preferred weight so I tell them to call me back in 6 months. When they call back I can get them a good rate on their premium. You can do things like that if you want to. It’s very important to make sure you understand what things are going to affect your premium. Age, gender, tobacco usage, your height, your weight and your medical history. Those things are pretty much going to affect your premium 100 percent. Those are the most important. If you don’t have a deep medical history, then the other four items are more important and going to pretty much determine it. But if you are good on those four and you still have a very bad medical history, then you can expect either lower rates or not getting approved. That’s kind of how it works. But I just wanted to say that those are the things that make up a life insurance rate. That determines what your rates are going to be.

Tom: That’s great information, too, because if someone’s looking to get life insurance for the first time after listening to this, they can start looking at that as well to make sure that they’ve checked off some of these boxes. If you’re if you’re smoking, you better stop. And if you’re overweight, it’s a good time to lose it and get a little prepared for this.

Sa: Definitely.

Tom: Well, this has been great. Thanks for walking us through all this. Can you tell people where they can find you online?

Sa: I sure can. You can shoot me an email at Leave me a comment on I’m on Facebook, Twitter and LinkedIn. Shoot me an email if you guys have any questions. If you need help with anything, feel free to reach out. I’m a licensed agent but I don’t practice that way anymore. However, I still have a lot of relationships with people that do. So if it’s a product or something I can’t help you with… Sometimes I get a lot of people saying they need a guaranteed universal life insurance policy and I can’t help them with that but I have licensed friends everywhere I can ask to help them out. So, feel free to reach out with any questions.

Tom: Great, thanks for being on the show.

Sa: Thanks for having me. I really appreciate it. I hope you guys got a lot of good information from it.

Thanks Sa, for making life insurance simpler and easier to understand and also for explaining why having the right amount of coverage is so important. You can find the show notes for this episode at Are you new to the Maple Money Show? If so, I want to thank you for listening. In case you weren’t aware, you can watch videos of many of our top episodes over on our YouTube channel. If you’re interested, head over to Make sure you “like” the video and hit the subscribe button. I look forward to seeing back here next week when we have Doug Nordman here to discuss old-school financial independence.

Whole life insurance is a type of permanent life insurance. A lot of people call them the same thing...the reason why people use them interchangeably is because most people get whole life policies, so they say it’s whole life, and they don’t say it’s permanent - Sa El Click to Tweet