The start of a lengthy discussion about the difference between whole and term life insurance
What type of insurance might fit you the best? Whole life insurance or term life insurance? Let us compare these two according to a few general criteria.
What is the difference between whole and term life insurance?
Whole life insurance consists of life insurance plus an investment on which you can earn interest. Term insurance covers the policyholder for the length of the policy and has no investment attached to it. Both will pay out a certain amount of money in the event of your death to your family members.
How much can you pay?
You should look at your financial budget and calculate how much you are able or willing to pay for a policy. Whole life insurance is much more expensive than term life insurance. This is because it combines a term insurance with an investment component. You therefore pay part of your premium for the insurance coverage and the other part for the investment that earns interest.
Term life insurance costs less than whole life insurance since the premium you pay is for life insurance only. You are able to choose between two types of term insurance premiums which can influence the initial costs: annual renewable or level term. A Level term premium stays the same for the duration of the policy. Annual renewable premiums might increase every year for the policy's duration.
What is your age?
Your age might influence your insurance choices. A person older than 50 will generally have to pay greater premiums for a term life policy. Also, if you are 65 and older, you may struggle to find an insurance company that is willing to sell you term insurance. Therefore, you may have no alternative but to buy whole life insurance.
If you live longer than the duration of the term insurance policy, no money will be paid out to you. If this happens with your whole life insurance policy, you will still have the investment portion left. You may then borrow money against the investment or take the cash value amount.
How long do you want to keep the policy?
The cash value of a policy is the amount of money you could be paid should you decide to cancel your policy. If you think that you may have to cancel your policy sometime in the future before it's duration is completed, this might have an effect on the type of insurance you could buy.
You could consider a whole life insurance policy if you are determined to pay the premiums for at least 20 to 30 years. This will usually ensure that you receive a worthwhile return. A Term life insurance policy may be a better option if you are going to keep it for shorter than 20 years.
The best decision you can make is to make it after you have studied the range of life insurance options you have.
Best to check out http://www.freewholetermlifeinsurancequotesonline.com where you can get help with your life insurance decisions.
In conclusion, the answer to your life insurance needs is a personal and financial one that should be considered carefully before making a decision.
Whole Life Insurance: Whole vs Term Life Insurance
