Term Vs Whole Life Insurance Policy: Term Insurance Comparison With Whole Life Insurance Policy
You need to think about the insurance policy for yourself and your family and the most important is the life insurance. The most important is to understand the life insurance and the terms and the cost of the insurance and the tax treatment of life insurance proceeds. There are two main types of insurance and they are the term insurance and the whole life insurance. The term life insurance is a simple form of insurance and you will be insured for a set period of time.
The insurance is the best way to keep your future secure and there are different insurance policies. The most important are the whole life insurance and the term life insurance. The insurance that covers the insured in life are of two types and they are the term insurance and the whole life insurance. The insurance are bought by paying regular premiums and you can choose the premiums pattern by choosing a yearly, half yearly or quarterly payment.
Term Insurance for your need
The period of time that you will be insured must be mentioned in the documents that you have to sign. You will also have to pay a premium for the period that you are insured for. You have to pay the same amount of money for each year and this premium is to keep the policy effective.
The premium is not a part of investment in this term insurance and you need to first understand that. The money insured for this policy is generally a round figure and it will be paid to your beneficiaries in case of your untimely death within the term period. The amount will not be paid to you if the term ends and there is no such unfortunate incident.
The term insurance with its features:
The term life insurance is there to provide you the death benefit and this insurance protects you for a specific period of time. The policy holder pays the premium and then the time of the term or the period of the insurance is fixed for the insured. If the insured person is alive after the term period them the premium is of no avail and the insurance company does not pay anything to the insured or his heirs. The insurance company can calculate another premium and then cover you for another few years. This way the premiums can rise and the coverage can be increased for more years each time.
Why taking term insurance is important:
The term insurance is suitable for those who want a maximum coverage for a lowest cost and the time is specific for the coverage. The parents who are stretching a lot to cover their children’s education and other costs of living expenses will buy a term insurance so that if anything happens to them the children’s education is not stopped as they will get the sum insured being the heir. When they complete education and start to earn, the parents do not need the term insurance and they can save the premium amount for their retirement period.
Whole life insurance or the permanent insurance
The whole life is also called the permanent insurance and if you continue with the premium you will be able to continue this policy for your entire life. The term life is valid till the term of the insurance that you have taken it for, the whole life is life insurance for you with an aspect of investment.
The insurance is a forced savings that you indulge in and it also assures you of the maintenance of your family in case of your untimely death. This aspect makes the whole life a lot more expensive which is not present in the term insurance policy. The whole life is also a way of building cash value for your account that is totally your money in any situation.
The whole life insurance and features:
The whole life insurance is an extension of the term insurance and this includes some savings element. The insurance is designed so that the mortality rate and the investment portion both increases at the same rate. The investment grows and the part of the insurance that is the face amount is paid by the actual insurance decreases and the death benefits are unchanged. The face amount is paid to the beneficiaries when the insured person dies or when the insured’s age reaches 100. They do not need any more premium and they pay back the amount.
Whole life is a permanent insurance till you pay your premiums:
The cash value is the best solution for a long term savings and the whole life gives you a lifelong protection and once you have the approval of the coverage, the carrier will not be able to cancel your policy till you keep on depositing your premiums.
They will not be able to cancel your policy even if your health is not in the proper condition or on any other grounds. The cash value that you are to receive can be used in any form that you want and you can even use it for a down payment of your home mortgage or for funding your children’s education.
Difference between term insurance and whole life insurance:
The term insurance is for a need for short period and when you do not have a lot of fund to go for the whole life insurance. The whole life is designed for a need of a long term solution. The term insurance is a death benefit and a protection for a short period against your death but there is no cash value gain from this insurance.
The whole life gives you a cash value accumulation and this cash value is accessible to you as loan or as withdrawal in a small or partial amount. You can exchange this policy or surrender in return of a payment of the sum insured.
The term insurance is quite inexpensive but gets expensive if you renew the coverage and the whole life is expensive when you are taking it but it will remain the same and you can enjoy the same premium throughout your life.
The term and the whole life differ in coverage and the death of the insured is honored by both during the period of the coverage. The term insurance covers the life till the covered period and the whole life covers the insured for the whole life. The term insurance can be bought for 30 years but the whole life is a combination of the term with investment and so the investment can be bonds or instruments from money market or even the stock market.
There are cash values in the policy of whole insurance and you can borrow against the policy to buy the bonds and stock. The premium remains the same for the whole life while the term life premium increases if you want to extend the policy after the maturity. The whole life is expensive but the term insurance are not so expensive.