Which One? Term Life Insurance Versus Whole Life Insurance

Choosing between whole life insurance and term life insurance may seem like a tough choice, but it really isn’t. In this article we’ll look at exactly what these are and help you evaluate your options. Life cover can basically be described as an amount of money paid to named beneficiaries when the insured person dies.

There are a lot of different types of life policies. I am only looking into two of these: whole life insurance versus term life insurance. Everyone’s needs are different. So, how do you decide which one to focus on for your particular needs? I am going to give you a few basic tips to help you decide which type of cover will suit you best.

First, we are going to look at each one separately and see where the difference lies, the strengths and weaknesses of each. In the end you will be able to make the choice that suits your individuality the best.

In plain terms, term life insurance is for a specific and limited term. By the end of the term, if the insured party did not die, he or she can renew the policy or drop it under the conditions of the policy.

If death did occur, the beneficiary would have been paid out. This kind of policy is most often used for a pure death benefit for providing coverage of financial responsibility of the insured after the person died. It does not build a cash value during the term of the policy. So, if the insured decides not to renew the policy after the term expired, all the premiums paid to the insurer is lost.

This is also the most common reason why whole life cover evolved out of the term version. It is for the entire life of the insured party. It has a paid up cash value. It means that when the insured reaches a certain age as stipulated in the policy, the policy has a cash value that could be paid out to the insured person.

The value of this payment should be equivalent to the amount paid out in case of death. Such a policy could even be used to get investment capital.

So, for instance, you are going to work only for a short to medium time period in a hazardous environment(only an example). You would need a policy with a high payout. In this case, a term life policy would be an option for you. If, however, you want death coverage for the rest of your life, while also building an investment with a payout option, whole life policy is the best choice.

Now you can make your choice between these two main categories: term life insurance versus whole life insurance. From there you can decide on a further refinement of your choice. Happy hunting.

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