subject: What Is The Principal Distinction Between Term And Whole Life Insurance [print this page] It is a challenging decision to make the decision whether to purchase term or whole life insurance. There are several distinct differences between them and before you buy, you should look at your options. Term versus whole insurance coverage is something that many people ponder and it is to you advantage to learn all you are able about each of them.
Term life insurance coverage policies are paid upon your death only. If you live longer than the life of the policy, then you get nothing back. Whole life insurance policies combine death benefits and cash value, which means that should you live longer than the life of the policy, you will get something back. You can cash in a whole life policy or borrow against it. You can not do this with a term policy.
Whole life policies will cost you more than term policies. This is because a portion of the premiums are put into a savings account that will build over time. The more money you invest over the years, the greater the cash worth of your policy. One important factor regarding whole life premiums, however, is that they never will change over the life of the policy.
Term life premiums will increase over time. The profits you make on whole life insurance are tax-deferred if you cash the policy in within your lifetime. Whole life policies, however, usually do not give a very high rate of return therefore many people believe that your money is better invested elsewhere. So, you need to decide if you are prepared to take a chance that the economy will rebound making it worthwhile to purchase a whole life policy.
It is a really difficult decision to choose between term versus whole life insurance coverage. Term insurance is there to provide for your family if you die. Whole life is there to do the same and, additionally, give you something back if you should live. You just need to weigh the differences and figure out what you are willing to pay now for coverage later. If you are willing to pay larger premiums for less insurance coverage but have something in the end, then whole life is for you. On the other hand, if you want to pay less for more coverage, then term insurance is something you should seriously consider.
by: TL Industries
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