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Are you having trouble deciding what type of insurance policy to purchase? If so, you should find out as much as you can about the various options available. In order to help you make a better informed decision, we’re going to discuss both whole life insurance and term life insurance policies.
Whole life insurance Coverage Just as its name implies, whole life insurance covers you for your entire or whole life. When you die, your beneficiaries will receive the death benefits of your policy. Therefore, every whole life insurance policy eventually pays out once the insurer passes away. Term life insurance Coverage On the other hand, term life insurance provides temporary coverage for a specific term. You can choose the term which can vary from one year to as long as 30 years. According to statistics, approximately 2 percent of all term life insurance policies end up paying out the death benefit. Lower Cost Versus Guaranteed Pay Out Term life policies cost much less than whole life insurance, but they may never pay out. If you purchase a whole life policy, you can rest assured that your family will receive the death benefit when you die. This will only happen if you happen to die within the specified term if you choose a term life policy. Do You Require Short or Long-Term Coverage? Before purchasing any life insurance policy, you need to ask yourself if you require short or long-term coverage. If you only require coverage for a short period of time, you may be wiser to purchase a less expensive term life policy. * Pay Off Temporary Expenses Many individuals choose term life insurance to pay off a mortgage loan or other temporary expenses such as your children’s college tuition. You won’t normally require as much life insurance coverage once your situation changes and you have paid off your home or your kids have graduated from college. * Obtain Coverage For A Dangerous Job Being employed in a dangerous job is also normally a temporary situation that may require short-term life insurance coverage. Most people eventually change to a less dangerous position or switch careers as they grow older. * Support Lifelong Dependents On the other hand, if you need to support a dependent for the remainder of your life, you should consider purchasing whole life insurance. A whole life policy is a great choice if you want to protect a handicapped dependent that will never be able to live on his/her own or a spouse who does not work outside of the home. These types of individuals will require your lifelong financial support, and a whole life insurance policy is guaranteed to pay them benefits when you die. In fact, whole life insurance can be considered as a type of savings plan that will provide your beneficiaries with money when you die. * Conduct Your Estate Planning Whole life insurance is also an effective way for wealthier individuals to conduct their estate planning. When they die, the proceeds of their insurance policy can be used to pay their estate taxes. A whole life insurance policy may also be suitable if you are a couple in your 40s or 50s who has young children. |
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