subject: Reasons Why Whole And Term Life Insurance Coverage Are Very Different [print this page] Virtually every person who has been in the market to purchase a life insurance policy has run into the confusing variety of plans out there. Two of the most popular plans are term and whole life. I have attempted to explain the dissimilarities and positive aspects of both term and whole life insurance. Understanding what they will cover, and the differences between them, may make it less difficult to determine which sort of coverage is best for you and your own family.
Term Life Insurance is a simple form of coverage. What you need to know is that term life is nothing more than pure life insurance. This means that term life is strictly life insurance coverage and does not build any cash value. Term life will only be paid to your beneficiary if you die within the time span of the policy coverage. You can buy this coverage for a set amount of years, and once the term has ended, you can either renew the policy for another set period of time or just let it go.
The advantage of term life insurance is that it is the most inexpensive life insurance policy. Its only function is to pay your beneficiary in the event of your death, which will of course, give you peace of mind knowing that they will be taken care of. Term life insurance is the simplest from of life insurance available.
Whole life insurance is a type of permanent life insurance which covers you as long as you live. Whole life insurance builds a monetary value, as well as covering you for the entire time you live. Unlike term life coverage, whole life policies build cash value. You will not be able to access the money until enough time has passed for it to grow in value, which can be many years. Due to the money making value, there are definite advantages to choosing whole life insurance coverage. If a person reaches the age of 99, they will receive the sum of all the payments they have paid in over the years.
Additionally, whole life insurance policies are regarded as a flexible policy. You are often allowed to vary your life insurance premium payments, as well as adjust the face value of your coverage. Keep in mind that you must sustain enough premium payments so that the cash value on your account does not drop below the charges against your account. The higher the amount of the premiums, the faster the account will grow into something usable. Since they function as an investment, whole life policies usually have higher rates than term life.
By now, you may be asking yourself exactly how one selects between term and whole life insurance. Before you make your choice, there are a few things you should take into consideration. The policy that works best for you will depend on your own individual set of circumstances. Some serious consideration should be given to the details and circumstances surrounding your life.
If the cheapest monthly premium is going to be the deciding factor, you will want to go with a term life policy. Term life will often be the only type of coverage that the elderly will qualify for. Term life is often selected by younger people because of the lower premiums. This allows them to still have coverage for themselves and their young families, and also be able to use the money they saved on premiums for other purposes.
Whole life insurance is the best choice for the long term, as you will have it your entire life. The younger a person is when they start their whole life coverage, the less their monthly or quarterly rates will be. It is a good choice for those who have built more assets and accumulated more money. A whole life insurance policy can be tapped into as a retirement account, to allow for extra money to use during ones retirement. It usually has a much higher pay out than term life, as well.
It isn't difficult to find out rates and amounts of coverage anymore. You can find all the information you need for free, simply by using the internet. All it takes is a few searches and filling in a little information about yourself. Use the internet to your benefit to make sure you aren't going to be overcharged before buying your next policy.
by: Katherine Hupp
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