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Have you ever wondered about the differences between Term Life vs Whole Life insurance? The salesperson may or may not explain it clearly or at all depending on what THEY WANT YOU TO PURCHASE. You may have watched The Suze Orman Show at one time or another. Suze gives quite a bit of insight as to what types of life insurance is right for a person and what isn't.

The topic of Term Life vs Whole Life Insurance comes up here when Suze Orman takes a call from one of her viewers.  Get a glimpse into what Suze Orman advises one caller on the topic of Whole Life Insurance also known as Permanent Life Insurance.

Deepak: Hi Suze! We love your show. My wife and I watch it every week. It's such an honor to talk to you.

Suze Orman: Oh. Thank you! What can I do for you?

Deepak: Well Suze, a friend has recommended that we buy a whole life insurance policy as an investment.

Suze Orman: Stop! Stop! There isn't a friend in the world. Not one friend in the world that if it is a true friend that would recommend you buy a whole life insurance policy. A snook, somebody who wants to take you, somebody who in my opinion is not a friend maybe. But there is no way a friend would do it. Does that answer your question already?

Deepak: It gives me a good sense of what you are thinking.

Suze Orman: Alright, how old are you though Deepak?

Deepak: 31

Suze Orman: How much of an insurance policy? What was the death benefit?

Deepak: Um, I think 50...$500,000.

Suze Orman: $500,000? Alright how much was it per year?

Deepak: Fourteen

Suze Orman: Fourteen Hundred?

Deepak: $14,000

Suze Orman: Fourteen Thousand dollars a year?!?!

Deepak: ...and the idea was largely use it as an investment to put money away to save on taxes.

Suze Orman: Ok, just out of curiousity...made my nose itch. I have to tell you whenever my nose starts to run I feel like Samantha...where I wanna...you know on Bewitched? I don't know if you were even born back then where I want to twinkle my little and get that guy out or whoever that friend is and off the face of this Earth.Listen, insurance is not an investment. Does this friend of yours happen to sell whole life insurance?

Deepak: Boy it seems like you're reading my mind here.

Suze Orman: Oh sweetheart that's not a friend that a sn....I don't even know %#*#)$! You know, it gives me dandruff I think. Listen, you can get a half a million dollar term policy for 20 years at your age for approximately $25 or $30 per month. OK? That's $300 per year. Now, if you really want to make an investment you could take all those other $1000s of dollars and take that money and invest it where? In a retirement account, a piece of real estate, in stocks, bonds, whatever it may be where it absolutely makes sense to you.

Do you know that I am a licensed insurance agent. A life insurance agent and I am licensed in every single state in the United States except Hawaii because I don't want to go to Hawaii right now to take the exam.

So I have been licensed everywhere. Very few people can tell you that they have that type of insurance background. I can tell you that if you put $14,000 into a whole life insurance policy, my friend, how much commission do you think I or your friend would make off of that $14,000 deposit?

Deepak: Like atleast a thousand or two.

Suze Orman: Oh, are you sitting down?

Deepak: I am.

Suze Orman: Are you? What don't you try about $10,000. Ok?

Deepak: Wow.

Suze Orman: So yeah, he could buy you...just forget it. Here's the bottom line. Don't do it. Do what I said. Buy a term insurance policy. You can get a half million dollars that way. $300 a year and tell your friend why doesn't he go and make some real enemies!

Suze Orman doesn't seem to like the permanent type of life insurance: Whole Life Insurance very much (also called Variable Life Insurance or Universal Life Insurance). For the amount of death benefit one can purchase Whole Life, as life insurance is way overpriced. 

Paying $14,000 (although not all Whole Life policies are this costly) you only receive $500k of coverage 

Paying $300 (or less) per year (not month!) you can get about $500k worth of term life insurance coverage

Customers are shelling out huge amounts of money for whole life insurance coverage.

Term Insurance is for a set term or time period from 1 year and usually up to 30 years .

When Life Insurance has an investment vehicle attached to it you now have whole life insurance coverage and monthly premiums will be paid for the rest of the insured's life .

Term Life Insurance = 100% Pure Life Insurance. No investments and much more affordable.

Permanent life ins is sold as life coverage with an investment but it really does not make sense to do so .  Is there any reason why life insurance should be added to an investment? 

Permanent Coverage or Whole Life means exactly that. You are paying on premiums for the rest of your life .

When there are those in your family that need your income to survive life insurance is paramount . If something happened to that income the family could no longer survive. Protection of the income provider is the key to having life insurance.

Once the children are grown up and making their own income they are no longer dependent on the parent(s) income . At that time you no longer need it for that purpose .

Do not fall into trap of making anyone rich by buying life insurance .  Death is not likely to happen while raising a family but life insurance is very important to have.  There is no point in buying life insurance for the sake of making someone rich. You're just throwing money away.  For the period of time for which you need life insurance it is much better to buy term life insurance coverage .

As you get older your term life rates will go up but they lock the monthly rate as soon as you start your policy. Only get it when you need it .

Invest your money or just save it .

It is sold to you as an investment for retirement / children's college fund / emergency fund in which it will grow while being held by the company and you can "BORROW" from it and pay it back with interest .

The only way to access your investment is to borrow it and pay it back with interest. It's how whole life insurance works. The label of "Cash Value" sounds dandy but it is very much a shallow deal 

The real ripoff? You receive absolutely NO CASH VALUE the first year of premiums payments. No doubt about it. The investment portion kicks in the second year of your policy. The life insurance agent that sold you that whole life insurance / permanent life insurance policy will get a major cut of your monthly premium payments as their commission. Your money? Yeah right. More like their money.

Take the money that you would save and put it into a retirement account which YOU CONTROL 100%. Always have 100% control of your funds so that you have the freedom to move it anywhere you choose. Keep away from any type of life insurance that is asking you to put money towards cash value or an investment. Examples include variable life insurance, whole life insurance, permanent life insurance or universal life insurance.

You have a better idea of which type of life coverage to purchase when comparing term life vs whole