Is There A Significant Difference Between Whole Life And Term Insurance?

by Joe Stewart - Date: 2007-04-04 - Word Count: 570 Share This!

Is There A Significant Difference Between Whole Life And Term Insurance?

I've had several people ask me what the real difference is between Term And Whole Life Insurance, And what their best option
is. As much as I like to help, the best that I can really do is explain the difference between the two and the pro's and con's of each type of policy. This will let you, the consumer, make an educated decision before you purchase a policy.

Whole life insurance provides insurance throughout your lifetime, as long as you maintain the premium payments. The policy will cover you up until your death or age 100, whichever occurs first. Some of the pro's of a Whole Life Insurance policy are that you will also build an account that has actual cash value. This is how it works. Some of your premium goes to buy life
insurance, and the rest goes into a savings account. You may borrow against this account if you need to, but you must repay
the loan. This gives you a bit of piece of mind in case of an emergency like unexpected hospital bills, vehicle breakdowns,
home repairs or any other of life's little emergencies.

Some of the con's of Whole Life Insurance is that it's not cheap. The premium payments for Whole Life Insurance coverage will be significantly higher than a Term Life policy would be. Another concern is that, as you get older the savings account feature becomes less attractive. This makes more sense for a younger person because they have their entire lives ahead of them, but for someone middle aged or above, I'd buy Term Life Instead.

Term Life Insurance is just what it sounds like, "Term". This means that you are only covered for a specified period of time or "Term." You could buy a "10 Year Term", a "20 Year Term", "Recurring Term", Guaranteed Term", ect. Does this make sense now?

Term Life is also known as "pure life insurance" because that's all you're buying. Some differences between the two policies are, unlike Whole Life policies, there's no savings account that accumulates or to borrow against. You only pay for insurance
coverage. Another con is that, as stated above, some Term policies are only for that specific Term or time frame, not your
entire life. See my website below.

Most Term policies are temporary insurance. An example of how this can be used would be for the "breadwinner" of the household who is middle aged, the kids are grown, but still in college, he or she has been paying on their major assets, like their home, ect. for several years and they need some security to make certain that if anything happened, everything would be taken care so that the family could go on without any issues, other than the loss of their loved one. A 10 or 20 Year Term Policy might be a good option for the fictional example above, depending on their specific circumstances

My hopes are, that you understand now why it's difficult to give specific advice to people without knowing their specific circumstances. Just learning the differences between these two more popular types of insurance policies should help you to further understand how life insurance works. Best of luck!

Joe Stewart is a former Life & Disability agent. He's made
understanding life insurance more manageable for consumers. You can read detailed information about life insurance at his website or by clicking on Whole Life Insurance
Quote Online

Related Tags: policy, premium, agent, life insurance, policies, term life, whole life, endowment, premiums, universal life, endowments, free quotes, variable life

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