Term Life Insurance vs. Whole Life Insurance – What's the Difference?

Whether you’re simply considering purchasing a life insurance policy, or have already made the decision to purchase a life insurance policy, it’s important to know the difference between a term life insurance policy and a whole life insurance policy. Knowing these differences will help you choose the best life insurance policy for you.

The most recognizable difference between term life insurance policies and whole life insurance policies is the fact that a term life insurance policy will cover you for a certain number of years, whereas a whole life insurance policy will cover you for your entire life. If you’re only looking for life insurance coverage for a specific amount of time, a term life insurance is probably your best bet. However, if you wish to be insured for the rest of your life, you should purchase a whole life insurance policy.

Another difference between term life insurance policies and whole life insurance policies is that whole life insurance policies offer a tax-deferred accumulated cash value. This acts as an investment component. Some people are interested in the ability to invest using their life insurance policies, so they choose to purchase a whole life insurance policy. However, if you use other methods of investment, a term life insurance policy is probably the best for you.

A third difference between term life insurance policies and whole life insurance policies is the difference in price. Term life insurance policies are generally cheaper than whole life insurance policies; however, whole life insurance policies often offer fixed annual premiums, so you won’t have to worry about your rates increasing if your health begins to deteriorate. Most term life insurance companies will raise your premiums based on the current condition of your health, as well as your age.

So, when you begin your search for the perfect life insurance policy, take these differences into consideration and decide which type of policy is best for you.

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Life Insurance

We all must go at one time or another – a morbid statement but true. Taking this into consideration, people who look into the future think up of ways to deal with that fact. Perhaps one of the things we worry about most is that when we go, we are going to leave family members behind; family members who might be left in a financial with our going. One solution to this concern is to take out life insurance.

Life insurance is basically a policy that ensures financial assistance to those you leave behind. It is mostly taken out by people who have dependents who will probably meet financial difficulties if something were to happen to them. Money from life insurance may be used for a variety of purposes, depending on the needs of the dependents. Funeral expenses are one of the most common uses of life insurance. Others also use money from life insurance to meet their daily needs, especially if they have no other source of income when the policy holder passes away. Some people take out life insurance to cover any loan payments or mortgages as well. Life insurance takes on different forms.

The 2 main types of life insurance are term insurance and investment type insurance. Term insurance is the most commonly acquired policy type as it is cheaper. This life insurance policy is usually paid out at a specific period of time after which payments are not required anymore. Upon the policy holder’s death, a lump sum will be meted out to the dependents. This amount would be tax-free. However, with term insurance, there is also a set period of time that it is effective. Should the policyholder still be alive when the set period of time elapses, term insurance will be forfeited unless the policyholder decides to continue making payments for another set period.

Investment type policies, on the other hand, cost a little bit more for the policyholder. This type of insurance policy covers the policy holder for as long as he lives. During the course of his life – as long as he keeps up with the payments – his insurance policy builds up an investment value as well. That is, the worth of his policy increases. This insurance policy can then be surrendered for cash. In some cases, investment type policies set down a specific age until which it is considered applicable. If you reach that age, you can cash out the policy. This type of life insurance also has the advantage of being used for different purposes such as collateral for a loan. However, if you do this, your death benefit will be reduced.

A lot of thought should go into taking out a life insurance policy for yourself. Which kind you choose would depend on your specific needs as well as your ability to make payments. Do not be hasty about the whole process. Take into consideration every little thing that is involved. Term insurance may be cheaper but you may need to build up cash value. You may want cash value to increase but you may not have the means to keep up with the payments. That would only mean forfeiture of your insurance – a waste of money. Think hard and be practical and your loved ones will benefit from it all.

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Buying Life Insurance on the Children

Every parent has to decide whether to buy life insurance on their children. While buying life insurance may not be an easy decision, the fear of not having it on your children may trouble you a bit.

Congratulations you have just become the parent of a baby boy or girl, or even twins or quadruplets. You have many new worries including the health, welfare, and eating habits of your child. What about life insurance on your child? While it may sound silly to a select few, those parents who were unfortunate to have a child die of SIDS, a car accident, etc., may have a different prospective. No one expects their children to die before them but it can happen. It may be sudden or unexpected, but all of us must realize that one day we will all come face with death.

There are those who have perceptions that life insurance should not be bought on children, because "the parents are wanting to get rich of the death of their child's death." Not having life insurance may cause a financial hardship in the case of a child's death. Also who really wants a check in a situation like this. The premium may be small enough that it is worth having that protection in place. There is a simple solution to solve this problem, just have enough life insurance on your child to insure burial expenses up to age 25 or so. Or if you have enough money in your personal account to bury any of your children then that would be another viable solution.

As children go off to college is important to reevaluate their life insurance needs. If they are going to have student loans or plan to buy a home after college it is important to plan ahead. Many times in college, children can find themselves uninsurable for any number of reasons. It is necessary to be conscious of this fact, in order to make sure they get on the right track to adequately have life insurance when they have a family.

Remember life protection has its benefits, but it costs money. It is necessary to evaluate your own particular situation. If it makes sense that proceed in getting in touch with an insurance agent you can trust and rely on.

Resource: www.articlesworldonline.com

Is life insurance a wise move?

A life insurance policy vouchsafes security for your dependents after your demise. They can eek out their living even at the absence of other active source of income. Moreover the amount that you are going to get at the end of the policy period in a term life policy also makes it a rewarding investment. Take a look at the article. The article covers

• Why take a life insurance policy?
• Is life insurance a promising career?
• What are benefits of life insurance?

Life Insurance Policy is a form of security for the person who insures his life and his family. Life insurance policies have helped trade and other economic activities to flourish in a great manner. It has generated lots of job opportunities. It is looked upon as a lucrative career option. Life insurance companies have also entered the international business scenario.

The following reasons substantiate why a life insurance policy should be taken:

A) Early Deaths

The mortality rate is experiencing a declining trend in many parts of the world. However it is also important to note that the age at which People die is also ever decreasing. Some reasons for this include unhealthy living style, stress, pollution, and some natural calamities. This necessitates people to make adequate measures to yield income for their family and dependents. This could be a serious concern if the insured happens to be the sole bread winner. Some individuals see this as an option to plan their retirement.

B) Advancements in Health Care

The mortality rate has declined rapidly even though the fact remains that the number of people who die at an early age is on the increase. This is mainly due to the advancement in healthcare and the awareness on medical facilities. This results in an increased spending at an old age. This increased spending is also due to increase in the costs of living apart from paying expensive medical bills. Unless they invest in Life insurance or other forms of insurance like health insurance it becomes next only to impossible to meet the financial demands especially during the old days.

C) Increase in the Cost of Living and Spending Power

The purchasing power of the consumers and the standard of living has experienced a steep rise over the years. The increase in National Income and gross domestic product are partly responsible for this. Individuals incur many unexpected expenses due to the growing needs. Insurance comes in handy to meet such an unexpected expense. It also makes sure that an individual is able to meticulously plan his finances.

Insurance option is more or less an interest free loan. An individual can cancel his insurance policy and obtain a huge amount if it is imperative in meeting an urgent expenses and he does not have alternative sources for finance. Life insurance companies therefore do the needful to consumers.

D) Tax Concessions

Income tax concessions are available to individuals and corporate houses who adopt insurance policies. Many have been making investments in Insurance with the sole aim of enjoying tax benefits. This naturally increases spending power. Since the investments increases the economic activities in the country automatically increases.

E) Best Option for Salaried Youth

Insurance is by and large regarded as one of the savings scheme. Students who earn while studying and those who take up full time employment after their studies see insurance as a profitable scheme to regulate their savings. Apart from tax concessions life insurance entails individuals to enjoy more benefits as they have special and attractive schemes for this segment.

Resource: www.lifecoverpro.com