subject: The Cost Savings of Term Life Insurance [print this page] The Cost Savings of Term Life Insurance
If you are considering the purchase of a life insurance plan, you will need to choose between whole life insurance and term life insurance. As the name suggests, whole life insurance covers the policyholder for life. While this may sound like the better option, it is not affordable to everyone. This is where term insurance has its advantages. It covers the policyholder for a certain period of time and costs far less than whole life insurance. While both insurance types will pay a specified amount of money to your family in the event of your death, the difference is in the timeframe and cost of coverage.
Your first step when determining a suitable insurance plan should be to figure out how much money you can allocate to a policy. Research you options online to see what types of insurance plans fit within your budget. Keep in mind that, just because a company offers cheap life insurance, this does not mean that your application will be accepted. There are many factors that can instantly raise the cost of your insurance plan. You will be asked to share personal information so that the company can determine what risk factors are involved. The health history of your family, personal habits such as heavy drinking or smoking, and a number of other factors can change the outline of the policy offered to you.
Whole life insurance is more costly because, not only does it include life coverage, it also includes an interest earning investment. If you choose this option, you will be paying a portion of the premium for the plan and will also be required to make payments on the investment.
With our current economy, many people seek less expensive options for life insurance. This is why term life insurance is growing in popularity. The premium that you pay on this type of insurance consists of only what is necessary to pay for coverage. You can always make an interest-bearing investment in the future through a separate source as your income increases.
If you opt for the less costly term life insurance, you will have the choice between a level term premium or an annual renewable premium. The level term premium will stay the same throughout the duration of your policy. The annual renewable premium goes up on a yearly basis, but, as long as the premiums are paid, you will not have to worry about providing regular evidence of insurability.
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