Monday, November 16, 2009

Term Life Insurance And Whole Life Insurance

Needs evolve and your life insurance should change with them. But deciding what life insurance policy is best for you is a more difficult choice. There are benefits in your term life policy but many people want the benefits of whole life insurance.

The Value of Term Life Insurance

Term life is designed to help people purchase the protection they need at the lowest cost or when they only need coverage for a specific period of time. Term life insurance has a guaranteed death benefit but no cash value and the premiums will increase at pre-determined intervals such as 10 years, 20 years or you can buy a level term policy to age 100.

It is also very often the product of choice when life protection needs may be high as when your family is growing. Term life insurance can also be an effective way to provide retirement income if you take a term life 100 policy or there is an age disparity.

Whole life insurance, in contrast to term life insurance, provide life insurance coverage plus other additional living benefits, including guaranteed cash values. However , you are then paying interest on your own money if you borrow against the cash value.

The Value Of Whole Life Insurance
Cash value life insurance is often the best long-term solution for many people. Here are just a few of the reasons:

1. Whole life cash value insurance provides life long insurance protection as long as you pay the premium. Regardless of your subsequent health, the life insurance will remain in force.

2. Whole life insurance builds guaranteed cash value. This cash value can be used for a down payment on a home, to help pay for your children’s education or to provide income for your retirement

A short comparison list may help illustrate the differences between term life insurance and whole life insurance:

Term Life:
- Designed for short term needs, except term to 100
-You pay for pure death benefit protection, without cash value accumulation, just like your car and home insurance
- Inexpensive, with known costs increasing at each renewal
- Term conversion privileges are available with most policies up to convert to a permanent policy that builds cash value

Whole Life
- Designed for long term needs but is not cheap
- Has cash value accumulation which is accessible through loans or partial withdrawals. You pay to borrow your own money
- Premiums are high for the life of the policy


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