Term Versus Whole Life Insurance
Each Policy Is Awesome In It's Own Way
Term versus whole life insurance. Why do some people create controversy
over subjects where none really exists?
There seems to be one that the
life insurance industry just cannot shake...term versus whole life
If you take the time to examine the two policies you would
realize that they simply are two different things.
You should not try to
compare one with the other. There are advantages to owning term life insurance as well as disadvantages. The same goes for whole life or any permanent, non term, type of life insurance.
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Term life insurance really was designed to be used as a stepping stone
to the eventual purchase of whole life insurance. Whole life insurance
was intended to be kept for as long as the owner lives.
people have combined both policies with some real gratifying results.
There really should be no term versus whole life insurance controversy.
Advantage To Owning Term Life Insurance.
- It may seem that one of the greatest advantages to owning
is its low premium.
In some cases this is really so but in others the premium for term insurance
increases every year and as a result the owner drops the policy because
the costs get too high...even above the level of whole life insurance.
Such is the case of the
yearly renewable term
Most term policies do, however, have a level premium for the
duration of the policy.
The premium for the longer term policies, like
20 year term policies, the
25 year term
policies and the
30 year term
policies even though they are less expensive than whole life they are
not significantly less.
None the less term insurance is way ahead
initially in our term versus whole life insurance comparison as far as
low premiums are concerned.
If your need for life insurance is temporary then temporary term may be the best policy for you.
Disadvantages Of Owning Term Life Insurance.
- The main problem with term life insurance is that the owner has to
die to win. This might on the onset sound like an absolutely ridiculous
statement but the fact is that this is true.
If you bear in mind that
life insurance whether term or whole life was created to protect your
family in the event of your death that might not sound as bad as it may
initially had. If you, however, compared term versus whole life
insurance there is an advantage to owning whole life in this area.
Another point to remember is that term insurance policies last
for a specific period of time and when that period comes to an end so
does your policy.
life insurance companies
have thought about this and have as a result built into most term
policies a conversion privilege. This allows the owner of the policy to
convert to a
within a specific period of years.
Many people see it as the
intelligent thing to do in the early years of the policy, when they can
afford it, as if they wait too long the period for conversion may run
out and they would be left without any life insurance at all.
You may feel that you can go buy another policy at that time.
That is true but you should remember that you will be older at that time
and likely in a less healthy condition. Your application may be
declined by the insurance company at that time.
Advantages Of Owning Whole Life Insurance.
- As the name implies you keep
whole life insurance
for your entire life. As long as you pay your premiums you can keep
It can never be taken away from you. In this area you can
see that as far as term versus whole life insurance goes whole life wins
Even though whole life insurance is a little more pricey than
term policies one should consider what you get for your dollar.
Participating whole life insurance policies qualify for
if the life insurance company performs well. Dividends are not
guaranteed. Dividends can be used to reduce the cost of your whole life
If you were to seriously think about it and check the past
performance of some policies you would notice that the cost of the whole
life policy can be much less than the initial cost projected by the
In some cases even less than the cost of a 20 year or 30 year
term policy. Whole life again wins in a term versus whole life insurance
Whole life insurance also has
...a part of which is guaranteed. By contractual agreement there is even
a minimum guaranteed interest rate.
You can use this money in any way
you want. You can take a loan from the company at any time and you do
not need to tell them why you need it...
You are charged a nominal interest rate on repayment. You should
also keep in mind that if the loan is not repaid the death benefit will
be reduced by that amount plus whatever interest is due at that time.
Since term insurance has no cash value the choice would have to be whole
life if you were looking for cash during your lifetime. Term versus
whole life insurance...there really is no comparison in this area.
Disadvantages of owning Whole Life Insurance
- If you examine all the policies incorporate you will soon realize
that the only disadvantage to whole life insurance is the higher cost in
the initial years.
This is really a temporary disadvantage in most
cases if the life insurance company performs well. If they keep their
costs down and if they do well with their investments the dividend
earned will eventually offset the higher premium cost of whole life
Term insurance should be purchased initially if you have a
need for a large amount of life insurance as your premium payment will
be much lower.
You should keep in mind the conversion privilege and
convert to whole life or another type of permanent policy when
universal life policy.
You could also consider
variable universal life
insurance or the
variable life insurance
policy which was designed to combine life insurance with high yield investments.
Some people combine whole life insurance with a term policy rider
in order to provide a larger death benefit and still have a cash value
policy. Term versus whole life insurance...each type has it's purpose.
There is nothing more important than your family's security. What would
happen to your family if you died? Would they be provided for? Compare
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