Whole Of Life Insurance And Term Life Insurance Differences
When buying life insurance its vital you get the right policy for your needs. With a plethora of web sites offering discount life insurance, it’s often easy to end up with a policy that is not suited to your unique needs and circumstances.
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 policies cover you a predefined term.
Term life insurance only offers protection for the duration of the mortgage, and is normally of no value when your mortgage is paid off.
However, term insurance is cheap, and the cost can even reduce over time. There are five main forms of term life insurance, and these are as follows:
* The first type is known as level term insurance, and it is a very popular policy. Here, the premium costs are locked in for the entire term of the policy. This means you pay the same amount every month/year for the term of the policy.
* The second type is known as escalating term cover. This type of policy can be become expensive in later years, as you generally pay an increasing amount as the policy ages. However, there is an advantage, in that the payout at death also increases. This type of life policy is normally more suited to younger people.
* 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.
* Finally, convertible term insurance is a type of term life cover that can be converted into an investment/insurance policy in the future. Normally, the value of such investments will be based on your health, at the time you bought the term insurance policy.
Whole of Life Insurance Policies:
Whole of life insurance covers you right up until the time of your death, providing that you keep paying your premiums. It can give a considerable lump sum to your family when you die, and it normally accumulates in value over the years.
The amount generally increases in value over the years. Also, the contributions you make to your policy normally earn interest each year. When this happens, your premiums may reduce over time, to the point where you no longer have any 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:
Buying a term life policy, or whole of life insurance is an important decision and one that needs to be made carefully. Before you take the plunge, you need to examine your needs, and exactly what you wish to achieve.
The simplest form of life insurance is a level term policy with renewable option. This allows you to buy life cover for as long as you may require it.
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.
There are advantages and disadvantages to both forms of insurance, so it’s always important to get advice from a competent insurance adviser.
Want a better life insurance quote? Visit Best Insurance Quotes for better life insurance
categories: life insurance,insurance,protection,mortgage,investments,finance
No related posts.