|
If you are still considering which to buy – term or life, no worries as I’ll have a show down of term vs whole life insurance. With regards to whether it is term of whole life insurance, both have the same objectives – to provide monetary coverage in times of disaster. However if you look into details, you’ll discover a vast differences. In this article, I’ll show these differentiation so that you can make an informed decision about which to purchase. Term Life Insurance Like the name suggest, term policy is only good for a period of time. The normal coverage period ranges from 5 years to as long as 20 years. These are some going as far as 25 to 30 years but these are not commonly bought. The premiums can be paid yearly or upfront in one lump sum. If nothing happens during the period a person is covered, no payment will be paid and all the moneys paid will not generate any cash values. Term policy is generally less expensive as compared to whole life policy and is considered entry level types of insurance. Individuals can choose to buy sum assured many times their worth and should disaster strikes, the insured sum will be paid. Premiums for such policy will stay constant but may rise with the individual’s age. On the other hand, if the individual’s health deteriorates, the payment may raise as well. Even with such restrictions, this type of insurance is still popular as the sum assured can be high with only a small investment. This is the main factor that motivates most people to buy. Now that I’ve shown you the term insurance, the showdown of Term vs Whole Life Insurance continues with presentation on the whole life insurance. Whole Life Insurance Like the name suggest, whole life policy is for the entire life. It is more complicated as compared to the term coverage. It can be viewed with providing dual objectives – protection and investment. This is because unlike the term assurance, whole life will provide protection while at the same time accumulates cash value over a period of time. The accumulation of cash value normally happens in long term and not short term. The whole life insurance can be classified under 3 categories and can be further subdivided into guaranteed and non-guaranteed segments. Traditional Whole Life Under this plan, it is normally guaranteed and will provide cash value in the long term. Individuals who subscribe to this policy will participate in the insurance companies’ investment and is entitled to get dividends. The dividends earned will increase the sum assured as well as the cash value. In times of emergency, you may withdraw the cash value to meet any upfront financial requirements. However, the money withdrawn will not be paid if disaster happens. Universal Life Unlike whole life policy, this insurance will not give out any dividends but will distribute interest on yearly basis. Again, the interest distributed will be added to the sum assured so your coverage will increase over the years and you can also withdraw out the cash value to meet any emergency requirements. Variable Life This is under no guaranteed segment and individuals must pick the combination of investment that suits their risk factor. For those who can’t bear risk for their investment, then do not participate in this policy. However, when the investment is done right together with the bulls market, the returns on such policy can be very lucrative. Hence, know what you are investing and understand the risk factor. Now that I’ve shown you the differences between life and whole life, you should be able to judge and decide for yourself the policies that best suit you. This is the end of the showdown between term vs whole life insurance and I hope that you’ve learned a lot in this article. If you like this article ( Term vs Whole Life Insurance ) and want to read more, please visit us there.
Related Articles -
Term vs Whole Life Insurance, Whole Life Insurance, term insurance,
| 
