I am 52 year old person and willing to purchase a life insurance policy for my 19 year old son. I have heard that there are two broad types of life insurance policies whole life insurance policy and the term life insurance policy, available at the market place. Can you tell me the pros and cons of these two types of policies? Which one should I purchase for my son?
Purchasing right type of policy is the most important thing in the life insurance buying process. The premium that you have to pay and the things that will be covered by the policy are the two important aspects, influencing your purchase. Since there are numerous life insurers operating in the market, you have to be very much careful and have to adequate research before a life insurance policy. You need to remember that the premium amount that you are required to pay can vary by as much as 50% for the same type of coverages and options. So, it is very much essential to get quotes from as many insurers as possible. You can also look for online insurance quote. Whatsoever, below here we discuss the pros and cons of permanent and term life insurance policies.
Whole life insurance policy
As the name suggests, whole life or the permanent life insurance policy provides you protection for your whole life. The whole life insurance policy will expire only upon your death and you will not be required to renew the policy after certain years. Under the whole life insurance policy, the amount for which you are insured is known as the death benefit. The death benefit is given to the beneficiary that you have chosen, at the time of your death. The whole life insurance policies have a saving portion attached with them. The saving portion helps you build up healthy fund. You can use the funds for various purposes according to your wish. You can borrow new money against this fund or else you can use the funds to finance the college education of your children.
Term insurance policy
Again, protection offered by the term insurance policy is limited. It is limited to the term of the policy. Generally, the term insurance policies cover 10, 15, 20 or 30 years. Generally, the term insurance policies are comparatively less costly than the permanent insurance policies, but the policy expires upon its maturity. Once the policy expires, the nominees of the policy have no claim on a death penalty. The cost of a term insurance policy depends upon several factors, such as health and the age of the insured, size of the benefits and on the term of the policy.
Which one to choose
The policy that you will choose depends on your financial capacity and goals. The term insurance policy is a comparatively inexpensive way to protect your dependents in case some emergency happen. Again, to continue with the whole life insurance policy requires a lot more financial capacity than to continue with term insurance policy. Moreover, the find generated from the permanent insurance policy can be utilized for various purposes.