Life Insurance: Term Life Vs. Whole Life

You can get term life or whole life insurance for your family. However, if you are the breadwinner in the family, whole life insurance can be better than term life insurance to ensure financial benefit for your family. Term life insurance, on the other hand, is a smart way to save money. For a lot of people saving money on regular basis is quite impossible (because of their limited income, debt, or other social obligations), however, when you have bought a term life insurance policy, you will be paying your premiums no matter what. When you save money, you will also be tempted to use your savings, however, when you pay premiums for the insurance you cannot use that money just like you can do with savings. You will have to wait until the policy matures, by the time policy matures you will have a lot of money.

Term Life Insurance Benefits

There are different types of life insurance policies and term life insurance is one of them. Term life insurance provides coverage for the insured person only for a specific period of time.

The primary benefit of term life insurance it has comparatively lower premium fees than other types of life insurance policies. The major disadvantage is it covers only a specific period of time. Once the term ends, you will have no coverage, and if you want, you need to buy a new policy.

Another benefit of term life insurance is you don't have to worry about losing your money if you die before the term ends because your nominee will still receive all benefits.

If you are in your 20s and 30s, a term life insurance policy is the best coverage because it is affordable and also provides protection to your family if you die and there will be no need to pay the remaining premiums. Sadly, the policy will have no cash value after the term expires.

Term life policy is also beneficial if you want to reap the benefits in your lifetime. After the maturity period, you will have insured money that you can use as retirement benefits or emergency funds in your old age.

Term Life Insurance or Whole Life Insurance: Which is Better For You

Term life and whole life are the two most common types of life insurance plans you can buy. While term life insurance is designed to provide financial coverage for a fixed term, for example, 10, years, 15 years, 20 years, etc., whole life insurance does not have any fixed term and is designed to provide coverage until the death of insured person (that’s why it is called whole life insurance).

Generally speaking, term life insurance plans are cheaper than whole life (has lower premiums and are required to pay premiums only for the insured term). Nevertheless, term life also offers less coverage. The premiums for the term life are calculated by multiplying the amount of coverage (the face value) with a factor that depends on the person’s age during the policy issue time and the type of term insurance.

Whole-life policies, on the other hand, have higher premiums. Since you pay higher premiums, you also get better coverage compared to a term life policy. This type of insurance policy provides coverage for the entire life of a person (until he dies). A whole life insurance policy is meant for a person who wants to help his or her family with finances even after he/she dies.

You can choose the policy depending on your priorities.

Why You  Need a Whole Life Insurance

Whole life insurance, as the name suggests, is a type of life insurance that provides coverage for the insured person from the time he/she is insured until death. It is also called permanent life or universal life insurance policy. The policy has a fixed premium and the insured person has to pay the premium until he dies. The policy will offer coverage lifelong.

The policy is comparatively expensive compared to other life insurance policies and not suitable for young people who are not married or do not have kids. However, if you have a family (spouse and kids), this is an ideal type of insurance plan as you will get a guaranteed death benefit payable to your beneficiaries (spouse, kids).

While life insurance plans have savings benefits and tax advantages. You have flexible premium terms, payable monthly, quarterly, or annually. The premiums are usually automatically deducted from your paycheck. When you have a whole life insurance plan, you also get tax deductions.

Even though whole life insurance provides you benefits to your beneficiaries upon your death, you will also provide coverage against big accidents and diseases (terminal illness.)

While term life insurance policies are aimed toward young people (people in their 20s or 30s), whole life insurance policies target middle-aged people (people in their 40s and 50s).