| What is the Difference Between Term and Whole Life Insurance |
 |
 |
 |
| Written by Allen Nolan |
| Wednesday, 30 December 2009 19:51 |
|
There is definitely a difference between term and whole life insurance, but you don't want to get the wrong one. One life insurance policy does things the other does not and vise versa. Arming yourself with the right information can lead to a life with your peace of mind intact.
There is without doubt a difference between term and whole life insurance, but you do not want to get the wrong policy. Because one is good for some situations where the other one isn't, as well as the opposite. Knowing the difference lets you buy what is best for you, and gives you peace of mind, knowing you have the right coverage. Term Life Insurance -- How Does it Work? This is one of the most inexpensive types of life insurance policies that you can choose. It is generally used in case you die in a predetermined length of time (typically ten, fifteen or twenty years). If your work carries a higher-than-average risk factor, or it you like to travel a lot, then term life insurance could be best for you. Term life does have an expiration date on it, hence the name "term", and once it does expire, you will either need to renew (generally at a higher rate) or get a different life insurance policy. It is not the kind of policy you would get if you anticipate you would die of natural causes. What is Whole Life Insurance? This is the type of policy which lasts for your entire life, and is paid out at the time of your death. There are two halves to such a policy of course; the death benefit, and the cash accrual. Why 2 halves, and why are they different? The death benefit will always be paid out; however the cash accrual part is essentially money storage, with interest. You pay above and beyond the actual cost of insurance, and it is put into an investment account, and you can in fact withdraw the money. Plus, you can obtain a loan against the account. Or, just don't touch it, and leave your beneficiaries extra money at your passing. Comparing the Two Insurance Types -- A Summary As you can see, the differences between term and a whole life policy are relatively straightforward. With a term insurance policy, you are covered for a set amount of time, and is ordinarily used if you have a high risk job, and maybe even some high risk pasttimes. If this sounds like you, then possibly term life insurance is the best option for you. Then again, if you are expecting to live to a ripe old age, then whole life is a better option in your situation. Another thing to consider, there isn't anything stopping you from getting both kinds of insurance policies. If you have both types of insurance, you are more secure than if you only had one. Plus the pay out is much better with two insurance policies than just one. So maybe even think of purchasing both of them; this may give you more peace of mind knowing you are really looking after your family even though you are gone. Do You Have the Right Coverage? FREE Information! DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. One day you will pass on-- and who will take care of your family then? Will they still have a roof over their head and food on the table? Find out more free information about term and whole life insurance, and maybe consider accident insurance, too (it's really inexpensive). |