The Difference Between Term and Whole Life Insurance - What You Need to Know
The difference between term and whole life insurance is important, and if you get the incorrect one, you might be in for some difficulty. Because one is good for some situations where the other one isn't, as well as the opposite holding true. Knowing the difference lets you buy what is right for you, and gives you peace of mind.
How Does Term Insurance Work?
Term is one of the most affordable types of life insurance policies that you can get. It is generally used in case you die in a predetermined amount of time (frequently 10, 15 or 20 years).
If your employment has a higher-than-average risk factor, or it you like to travel a lot, then term life insurance could be good for you. Term life does have an expiration date on it, hence the name "term", and once it does expiry, you will either have to renew (usually at a higher rate) or select a different insurance policy. It is not the kind of insurance you would get if you think you would die of natural causes.
Whole Life Insurance
Whole life is the kind of insurance policy which lasts for your full life, and is paid upon your death.
There are 2 parts to whole life insurance of course; the death benefit, and the cash accrual.
Why two parts, and how are they different?
The death benefit is always the primary reason for the insurance; however the investment part is mostly money storage, that gains interest. You pay somewhat more than the actual cost of the life insurance, and it is put into an account, and you can actually withdraw the money. In addition, you can get a loan against the investment amount. Or, just don't touch it, and leave your beneficiaries more money at your passing.
A Summary of the Differences Between Term and Whole Life
So, the difference between term and whole life insurance is pretty straight forward I believe.
With a term insurance policy, it is a preset length of time, and is commonly used if you have a high risk job or hobbies. If this sounds like your life, then maybe term life insurance is the right option for you then.
However, if you anticipate living to an old age, then whole life is a much better option in your situation.
Another thing to consider, there isn't anything preventing you from getting both types of insurance. If you have both, you are better secured than if you only had one kind. Additionally the pay out is much better with two life insurance policies than just one.
So consider purchasing both of them; this may give you a better peace of mind knowing you are really looking after your family even after you are gone.
So What Do You Think -- Do You Have the Right Coverage? - 23211
How Does Term Insurance Work?
Term is one of the most affordable types of life insurance policies that you can get. It is generally used in case you die in a predetermined amount of time (frequently 10, 15 or 20 years).
If your employment has a higher-than-average risk factor, or it you like to travel a lot, then term life insurance could be good for you. Term life does have an expiration date on it, hence the name "term", and once it does expiry, you will either have to renew (usually at a higher rate) or select a different insurance policy. It is not the kind of insurance you would get if you think you would die of natural causes.
Whole Life Insurance
Whole life is the kind of insurance policy which lasts for your full life, and is paid upon your death.
There are 2 parts to whole life insurance of course; the death benefit, and the cash accrual.
Why two parts, and how are they different?
The death benefit is always the primary reason for the insurance; however the investment part is mostly money storage, that gains interest. You pay somewhat more than the actual cost of the life insurance, and it is put into an account, and you can actually withdraw the money. In addition, you can get a loan against the investment amount. Or, just don't touch it, and leave your beneficiaries more money at your passing.
A Summary of the Differences Between Term and Whole Life
So, the difference between term and whole life insurance is pretty straight forward I believe.
With a term insurance policy, it is a preset length of time, and is commonly used if you have a high risk job or hobbies. If this sounds like your life, then maybe term life insurance is the right option for you then.
However, if you anticipate living to an old age, then whole life is a much better option in your situation.
Another thing to consider, there isn't anything preventing you from getting both types of insurance. If you have both, you are better secured than if you only had one kind. Additionally the pay out is much better with two life insurance policies than just one.
So consider purchasing both of them; this may give you a better peace of mind knowing you are really looking after your family even after you are gone.
So What Do You Think -- Do You Have the Right Coverage? - 23211
About the Author:
Face it - one day you will pass away, and what of your family? Will they still have a roof over their head and food on the table? Find more free information about term vs whole life insurance, and maybe consider accident insurance, too (it's really cheap).
posted by X - Men @ 2:26 AM
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