Term Life Insurance vs. Whole Life Insurance- How to Decide?
Sometimes when you are in the process of buying life insurance you may need assistance when looking at term life insurance vs. whole life insurance. There is one major difference between the two, and that is that term life insurance is only life coverage. Basically, when the insured person dies the policy pays out the person who is named as the beneficiary.
You have the choice to purchase terms of anywhere between 1-30 years. However, whole life insurance can actually double as an investment. You have the ability to use the cash value to invest (stocks, bonds etc.), or you could even borrow against it if you wish. Monthly payments can be fixed with both types of insurance.
A lot of times you will hear insurance agents calling whole life insurance policies retirement plans. It is basically a way to force you into saving money, since you have to pay the premium on a monthly basis.
It is fairly expensive to have whole life insurance, since the investment is included in the cost of the insurance. You will need to determine if this is worth it for you.
You will want to look closely at the fees and commissions involved in any of these policies. Compare them with your yearly return. Also make sure you double check how much the up-front commissions are, just in case there are any hidden costs. Sometimes it can be difficult to determine when you are paying toward the insurance as opposed to the investment. So just take caution, and keep a close eye on these things.
If you happen to be less than 50 years old, you will find that you can get term life insurance for dirt cheap prices, as long as you are healthy. However, once you surpass this age the price begins to climb. Whole life insurance is the same way, but you will have to get it anyway if you are over 60. You will be hard pressed to find a company that will sell term life insurance to a 65 year old person. If you are just starting out as a new family, you may find that whole life insurance is a good option for you.
However, it would be advisable to have an expert take a look at whatever policy you are thinking about going with. The expert will be able to tell you if the policy you are looking at would be a sound investment to make, or if it would be a big waste of money. Some experts say that in order for a whole life policy to be beneficial it must be held for at least 20 years. This may or may not be true for your particular policy, so show it to your chosen expert to find out. Either way, if you do go with the whole life insurance policy, you should be prepared to pay into it for a considerable amount of time. When comparing term life insurance vs. whole life insurance it is clear that individual needs must be taken into account before choosing one or the other.
Article Source: FxTradingStock.com
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Next, find out more about term life insurance vs whole life insurance in the best specialized website available on such delicate topic.
by: Joe Maldonado
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Date: Fri, 11 Mar 2011
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