Revealed: The pitfalls of whole life insurance! Why do many financial experts denounce it?

Whole life insurance is often criticized as an expensive insurance product with a low return rate. First, the cost of whole life insurance in the first three years is usually about 20 times higher than that of term life insurance. During this period, the cash value accumulation of the policy may be almost zero, which makes the policyholder disappointed. Sellers usually emphasize that whole life insurance can provide lifetime protection and accumulate cash value in the policy, but in fact, the return rate of these cash accounts is usually only 1.2%, which is far lower than the average return rate of 10% in the stock market.

In addition, the total cost of whole life insurance is very high. For example, the premiums for term life insurance in the first few years may be only a few tenths of that for whole life insurance. If the insured accidentally misses the payment, not only the policy may be cancelled, but even the accumulated cash account may be completely lost. After the insured dies, the insurance company will confiscate the cash value, which means that these accumulated funds will not be passed on to the family members.

The downsides of whole life insurance also include its complexity and opaque fee structure. Even those who purchase this type of insurance often have difficulty fully understanding its terms and fees. In the long run, this type of insurance has very limited returns. For most people, it may be a wiser financial decision to choose term life insurance and invest the remaining funds in higher-return investments (such as the stock market).

Therefore, although whole life insurance promises long-term protection and cash accumulation, its high costs, low returns and complex operations make it a poor choice in the eyes of many financial experts in practical applications.