Is There Really Much Difference Between Term and Whole Life Insurance?

by Joe Stewart - Date: 2007-04-03 - Word Count: 558 Share This!

How Is Term And Whole Life Insurance Different?

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

Whole life insurance gives you insurance coverage for your whole life, as long as you keep up the payments. These policies are in effect until your death or the age of 100 years, whichever happens first. Some of the pro's of a Whole Life Insurance policy are that you'll build a savings that can later become an asset. It works like this. Some of your premium goes to buy life insurance, while the rest is placed in safekeeping for the future. 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 unexpected vehicle repairs, hospital stays, ect. or any other of lifes emergencies.

Some of the con'ss 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 con is that as you get older the savings account feature becomes less attractive for someone who's just buying a new policy. This policy makes more sense when someone has their entire lives ahead of them, but for someone middle aged or above, I'd buy Term and invest elsewhere.

Term Life Insurance is just exactly what it says it is, "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. Do you understand?

Term Life Insurance coverage is also known as "pure life insurance" because that's all you're buying. Here are some more
differences between Term And Whole Life. Unlike Whole Life policies, with Term there are no savings account that accumulates or to borrow against. You are simply paying for insurance. Another con is that, as stated above, A few Term Policies such as Guaranteed Term, can be rolled over, but that's another story. You need to visit my website below and I explain it there.

Most Term policies Only last a specified period of time. An example of how this can be used would be as follows. 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 living arrangements.

I hope that you understand now why it's difficult to give financial planning advice to people without knowing their
specific circumstances. Just learning the differences between these two more popular types of insurance policies should put
ahead in the game of life insurance. All the best!

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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

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