Term Or Whole Life Insurance?
Choosing The Right Life Insurance
How do you know which is better term life or whole life insurance.
We will try and untangle these two different insurance policies.
Life Insurance Types Simplified
Term life vs whole life or both? Once you understand them, they aren’t as complicated as you might think.
One plan might offer dual benefits as in a death benefit and a return on investment benefit. Which is where some of the premium is invested in stocks or mutual funds.
In another plan the policy pays monetary benefits to your beneficiaries upon your death which is called term life insurance. This policy is cheaper as far as premiums go.
Both options may appear appealing but you must know which one to use. It all depends on your risk tolerance, savings patterns and income stability.
In this comparison a 30 year old man with a death benefit of 30,000 in a whole life policy would expect to pay a annual premium of 3000 dollars, whereas a term life policy would be only 300 dollars a year for the same death benefit.
An additional point to note is that the term policy will increase in premiums the older you get, so by the time you are 65 your premiums may be 12,000 dollars a year. In contrast the whole life policy premiums will remain the same.
Two advantages of the whole life policy are you can borrow from the investment at a low interest rate or utilize the accrued money on demand.
Since both policies have benefits you will have to determine which one is right for you. You may want to start with a term insurance policy for protection in case of a untimely accident and then think about investing in a whole life policy where you can choose which investment you want to invest in.
Compare Life Insurance Policies
In term life you will have certain options like 7 year or 10 year policies. Just as when comparing commercial insurance policies, shop around for the cheapest premiums from different insurance brokers. This will give you the best of both life insurance policies so do your homework and read the policy careful as always.
