|
|
Whole vs. Term Life Insurance: Which is Best for You
Investing in life insurance is one of your most important financial decisions, particularly if you are the primary provider for your family. Life insurance provides financial coverage for your loved ones in the event of your death. Life insurance policies can be for a few thousand dollars up to a million dollars or more. Considering the fact that funeral expenses alone can cost several thousand dollars, it's important to think about these future expenses as grim as it might seem.
If you don't have life insurance or are considering getting a new policy you need to understand the difference between the two most common forms of life insurance: whole life and term life.
Whole life insurance is considered to be the best in terms of long term investing. When you purchase a whole life insurance policy, that policy will be in existence for the life of the insured. The premiums for whole life insurance are much higher than for term life insurance, but whole life insurance policies accrue value over time. After you have had your whole life policy for several years, you can borrow against the cash value in order to pay for things like a car or a down payment on your house. Although you will have to pay back the money that you borrow, it will be at a better interest rate than other forms of lending. With smart financial planning and the use of whole life insurance policies, you may never have to borrow money from a bank again.
Term life insurance policies operate a bit differently. The main benefit of term life insurance policies is that they have lower monthly premiums. They are cost effective for most people since they don't significantly cut into a person's monthly budget. The premiums for term life insurance are low because the coverage only lasts for a specific period of time. Most term life insurance policies last between fifteen and thirty years. Once the policy has expired, the benefits can no longer be used and the premiums that were put toward the policy are effectively lost.
The decision whether to pick a whole life or a term life policy is a very personal decision that should be made once you consider your financial position and your ultimate goal for the policy. Many people do not have the budget for a whole life insurance policy early in their career but still need coverage for their young family. In this case, term life insurance for a period of fifteen to twenty years makes a lot of sense.
For those who have more money to invest on a monthly basis, whole life insurance is a natural choice. Despite the higher premiums, they have the added benefit of additional financial security. Since the policy doesn't expire, you can be confident that your monthly premium is going toward something that will be there to offer financial help for your family in the long term.
Now that you know the basic differences between whole life insurance and term life insurance you are armed with the information that you need to make the best decision for your circumstances.
About the Author Family-owned and operated, BudgetLife.com has been providing detailed information on life insurance online to consumers since 1996. Visit their website for the best term life insurance quotes from dozens of the top companies nationally.
|
 |
Please Rate: |
|
Rating: |
 Processing ... |
(Average: Not rated) |
| Views: | 27 | |
|
| More Articles from Insurance | | |
| Top Articles in Insurance | | |
|
