There is absolutely a difference between term and whole life insurance, but you don’t want to get the wrong insurance. One life insurance policy does things the other doesn’t and vise versa. Knowing the differences lets you get what is best for you, and gives you peace of mind, knowing you have the right coverage.
And when you’re finished reading, you’ll be able to decide if you really have life insurance…or you only think that you do.
Term Life Insurance
Term is one of the most affordable kinds of life insurance policies that you can choose. It is typically used in case you die in a predetermined length of time (usually 10, 15 or 20 years).
If your employment carries a higher-than-average risk factor, or it you like to travel a lot, then term life insurance just might be right for you. It does have an expiry date on it, hence the name “term”, and once it does expire, you will either need to renew (ordinarily at a higher rate) or buy a different insurance policy. Term is not the kind of policy you would get if you think you will die of natural causes.
So What’s Whole Life Insurance?
Whole life is the kind of insurance policy that lasts for your full life, and is paid upon your death.
Whole life consists of two parts; a death benefit and an investment benefit.
Why 2 parts, and how are they different?
The death benefit is always the primary reason for the insurance; however the cash accrual part is in essence money storage, that gains interest. You pay above and beyond the actual cost of insurance, and the extra is put into an account, and you can actually withdraw money. Also, you can get a loan against the account. Or, just don’t touch it, and leave your beneficiaries additional money when you pass away.
In Summary, the Difference Between Term and Whole Life
So as you can see from the above, the difference between term and whole life insurance is pretty straight forward I believe.
With term, it is a preset length of time, and is typically used if you have a high risk job or hobbies. If this sounds like your lifestyle, then perhaps term life insurance is the best option for you then.
Then again, if you are expecting to live into your old age, then whole life is a much better choice in your situation.
One more thing to consider, there isn’t anything preventing you from getting both. If you have both, you are more secure than if you only had one. And of course the pay out is much better with 2 policies than just one.
So consider purchasing both term and whole life; this may give you a better peace of mind knowing you are really looking after your family even after you are gone. And don’t forget about accident life insurance!
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- Universal Term Life Insurance Guide 101
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- Identifying a Good Site to Buy Term Life Insurance Online
- Do You Have a Life Assurance Coverage or Are You Preparing to Get One?
- Best Ways of Getting Term Life Insurance QuotesIHow to Get Term Life Insurance Quotes
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