| Differences Between Term Life Insurance And Whole Life Insurance |
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| Written by Graham McKenzie |
| Friday, 03 September 2010 07:58 |
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All life insurance policies can be categorized as "term", "whole life", or a combination of the two. This means there are many different variations in policies.
All life insurance policies can be categorized as "term", "whole life", or a combination of the two. This means there are many different variations in policies. Universal life insurance allows you to adjust the premium and policy amount to what you feel you need. For someone who wants to have control over the financial and investing aspect of their insurance, the variable life insurance policy will be the best option. Description of a Term Life Insurance Policy The term life insurance policy provides insurance protection for a particular period of time. The term may be extended to 5, 10, or 20 years. When the term ends the policy also expires without any benefits and without any saved or accumulated cash value. But if you die during this term then the death benefit will be paid. The term insurance policy can be said as insurance that is actually designed to expire before you do.? Usually the premiums on the term insurance are not that big, but as you grow older you will have to pay more. So considering the profits a term life insurance policy is more economical when bought at a younger age along with a longer term. Even though the short term renewable policies are substantially lower when people are young, it will be highly expensive when purchased after middle age. Below here is an illustrative example which shows the difference of term life insurance policy cost with age. $300 / year age 35 $900 / year age 50 Age 65: $2,500/year What's a whole life insurance policy? Whole life is the most common type of life insurance. The policy remains in effect until you die or reach age 100, assuming you pay the scheduled premium. Whole life insurance is also known as 'ordinary life' or 'permanent' insurance. They feature level premiums, level face amounts, guaranteed values, and a high degree of safety. Whole life insurance has a guaranteed cash value, through which a living benefit is built. Because of this, the owner can access the cash for emergencies, or use it as a supplement to retirement income if necessary. Whole life insurance includes both insurance and savings: whole life policies are often used in long-term financial planning. The level premiums of whole life policies also mean that the premium will never change. This gives you the peace of mind of always knowing how much your premium will be; it will not increase as you grow older. There are different risks involved for companies which provide whole life insurance policies and those which offer auto policies, for example. With an auto policy the insurance company hopes the policyholder will be a safe driver and never be in an accident. On the other hand, when an insurance company issues a whole life policy it knows it will someday have to pay the claim. Shopping for life insurance is now quite simple to do online. You can compare companies and policies to make sure you get the best premiums for the policy that meets your needs. It's well worth the time to get several quotes, and to see how the companies are rated with the Better Business Bureau. It's also important to look into the financial standings of the companies you're considering before you sign up for any type of life insurance policy. If you do your research, you will easily get the best whole life insurance policy online. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Graham McKenzie is the content syndication coordinator a leading South African Life Insurance and Life Cover portal. |