When looking for life insurance, it’s important to find the best policy for your own unique needs. There are so many web sites offering online discount life insurance, so it’s a common mistake made by many, to end up with a policy that’s not suitable.
One of the questions that arise time and again is whether a term life policy or a whole of life policy is best, and what’s the difference between them.
Term Life Insurance & it’s Benefits:
Term life insurance is a bit like leasing a car. You pay cover for a predefined term, and are covered for that term. However, at the end of the term, whether for example its 15 years or 30 years the deal is done and you simply walk away.
Term life insurance only offers protection for the duration of the mortgage, and is normally of no value when your mortgage is paid off.
Term insurance is also cheap, and can even become cheaper over time. There are also a number of different types of term life insurance to choose from as follows:
* The first is level term insurance, and it is the most popular type of cover. This policy has it’s premium costs locked in for the full term of the policy, so you pay the same amount each month for the entire term of the policy.
* The second type of term life cover is known as escalating term insurance. This type of scheme means that you pay an increasing amount each year, so the payout at death also increases. They are generally low cost policies, and are more suited to first time buyers and the young. However, they can become more expensive as you get older.
* The third type of term cover is known as decreasing term insurance. With this type of policy the monthly/annual payments stay exactly the same. However, the amount of protection reduces each year.
* The forth type of term life insurance is what’s known as increasing term insurance. Here the lump sum payable at death increases each year. This increase in value of the policy is made up by increasing the premiums periodically over the years.
* The fifth and final type of term life insurance is known as convertible term insurance. This type of term life policy provides a way for you to convert your policy into an investment/insurance policy in the future. With this type of policy the price of your future investment policy is based on your health when you bought the cheaper term insurance.
Whole of Life Insurance & it’s Advantages:
Whole of life cover covers you right up until your death. Provided, of course, that you keep paying your premiums! It can pay out a substantial benefit to your loved ones when you die, and it can also accumulate a cash value over time.
Whole of life policies can be more expensive and more complicated than term life insurance. Also, the investment you make can earn some interest each year. Therefore, since your investment generally grows each year, your premiums can actually reduce over time. You may also reach a time where the interest gained covers all the future premiums, which means you may have no more premiums to pay.
However, it’s important to understand that it is possible the cash-in-value of a whole of life policy may actually be less than the amount put into the policy over it’s full term.
Summary:
The decision of whether to buy a term life policy, or whole of life cover comes down to your own unique needs, and circumstances, and what you wish to achieve.
Term life policies are the simplest and cheapest to set up, and cover you only for as long as you need them.
On the other hand, a whole of life policy might suit you better if you need a policy that grows in value over the years.
Both types have their advantages and disadvantages, and careful consideration and advice from a competent insurance adviser is vitally important.
Michael Pettigrew is an article writer for Best Insurance Quotes, a provider of quality cheap life insurance quotes. Visit Best Insurance Quotes to get a better life insurance quote
categories: life insurance,insurance,finance,mortgage,investments,general