Term Life Or Whole Life – How Do You Determine Which Type of Life Insurance is Right For You?
In comparison, the whole life insurance yields a higher payment as they cover both the insurance as well as the investment. There is some sort of “forced savings” inherent in forking over the premiums each month. However experts on whole life insurance tell that whole life policies will yield reasonable returns if they are held for a long hauling of 20 years or more.
Term life enables the policy holder to purchase life insurance for a set amount of time. Premiums are paid for the entire term, and once the term expired, the policy holder’s death benefit is gone. It does not have any cash value component. This is the key difference between a term life and whole life insurance policies.
Here are some of the benefits of whole life insurance with their suitable candidates:
- Whole life insurance is highly secured, with great flexibility as it continues to generate cash value along the years. The accumulated cash value is useful for supplementing retirement income, startup your business or for your children’s college education.
- For senior citizens over 50 years old, who are conservatively seeking for a high secured life insurance plan with low risk.
- Whole life insurance is the right choice if you plan to leave an inheritance for a charity association or your dependents.
- There is no better choice than the whole life insurance plan if you are the sole bread-winner for your family.
- With a whole life insurance, you have a guaranteed premium, interest rate, and death benefit for the active life of the policy. The cash value is eligible for tax-deferred during the policy active years.
On the other end of the spectrum, term life insurance has its own strength and suitable candidates as well:
- A term life insurance is suitable for you if you are young and healthy. It is much cheaper and affordable by the majority. A term life insurance is allowed to be deactivated at any one time if one found himself having difficulty supporting the monthly payment.
- The policy holder can stop paying on it when you reach certain milestones, such as when your children graduate from high school or college or when your mortgage is paid off.
- A term life insurance allows one to buy as much coverage as you believe is needed only. One does not need to buy the coverage for whole life if there is no such need.
- For most of the term life insurance policy, they are convertible to the whole life insurance policy if the policy holder prefers a more secured insurance plan when he is older.
In reality, everyone has his/her choice in different situation, and no one can comment if they are right or otherwise. The key is to be clear on your top priority when it comes to insurance, and take the time to learn what each type of policy offers and you can be assured that you will find an insurance policy that’s right for you eventually.