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Buy a term plan and secure your family
“What is term insurance?”
“What is whole life insurance?”
“How can I get the information I should have in order to make the right choice about the type of life insurance for you or maybe your family or other loved ones?”
This thread will give you a brief description of these two very popular types of life insurance policies so that you can get a fair idea of what might be the good pick for your needs and requirements.
Deciding whether to opt for a whole life or term coverage policy is a decision that is personal to everyone and should be based on the financial goals of the policy seeker as well as the financial needs of your beneficiaries.
Life insurance is a financial product that is extremely flexible and also powerful. It can help you in meeting with various financial objectives you may be having. Be it providing your loved ones with financial security or leaving behind a legacy.
Here are some of the key features of both whole life and term coverage.
When you are in the midst of making a decision whether to opt for whole life or a term coverage, there are some variables that you should take into account. You can also seek the help of a professional in order to help you evaluate the following aspects of your current scenario and determine which out of the two coverage policies is the right choice for you. Some of the factors that you need to consider are:
For instance, if you are an individual, who is about 35 years old with young children, and being the breadwinner of your family, you might want to consider opting for a term insurance coverage that will help in completely covering the financial obligations of your family.
Adding up the living expenses along with any mortgages you may be holding, the payments of your debts, along with your children’s future education costs will help you get a better understanding of the face value of a policy that your loved ones would require in case of your untimely demise. The tenure of the policy depends on the age of your kids and when you think they will be completing their further studies.
On the other hand, you can opt for a whole life coverage that will not only give the payout to your beneficiaries if you are no longer around till your child is out of college, but will also accrue cash value that would provide additional benefits to your loved ones or will act as a growing fund for any emergency financial needs.
If you are starting to consider opting for a life insurance policy at the age of, say, 60, your kids are most likely to be grown up and financially independent, and your needs are quite different. You might be needing a coverage policy that is short term and sufficient to cover your financial expenses, or you might be needing cover that will help in providing a financial cushion for your partner’s needs if you are not around anymore.
There are numerous flexible and creative options for life insurance coverage in the market that can meet your requirements.
Now that by this point you are much clearer about the differences between whole life and term insurance, you probably would want to get onto comparing the costs of both these coverage policies. To do this, you need to directly compare the short run and the long run costs of whole life insurance and term insurance, based on various factors such as your age, the face value that you require, and your smoking habits.
You may find that the whole life insurance prices comparatively daunting as opposed to the costs of a term insurance plan. The main reason behind this is that the premium charges that are paid towards term plans are only there to provide your nominees with a death benefit if you pass away during the tenure of the policy. Whereas, the money that you put in as an investment in the premiums charged on the whole life plans builds a cash value that can be used later in life by the policyholder or be added to the death benefit payout.
The portion of your costs that are proceeded towards the accumulation of the cash value increases every year.
Most of the term policies out there allow the policyholder to convert into a permanent life insurance policy such as the whole life plans. However, is it the right choice to do so? Well, that depends on your needs. Some of the reasons why it may be a good idea to opt for this conversion are:
Converting your term plan into a whole life plan can be a good way to continue your life coverage policy while building up cash value at the same time, that can also be used in case of any financial emergency that may occur in the future.
There are numerous ways by which you can structure this policy, depending on your financial goals along with your needs and requirements, so you should assess your needs properly and if needed get help from a professional before moving forward with any decision.
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You can opt for both – whole life insurance and term insurance at the same time also. People who are thinking of choosing this option generally are already owning a whole life coverage. However, they may find themselves under certain scenarios where they think an additional coverage policy for the short run would do them good.
If you are someone facing this, a term plan can be a good option to go with for that additional coverage.
Or, it is also possible that you may be having an existing term policy and you find yourself to be thinking to invest some additional funds into a longer run investment avenue for purposes such as retirement, or estate planning. In this scenario, opting for a whole life coverage policy that helps in the accumulation of cash value may be a good choice to make.
The Final Say
Now that you are clearly aware of the differences between the term insurance policies and the whole life insurance policies, you can go ahead in making an informed decision in order to find the best life coverage solution for you and your dear ones.