People often seek a simple answer to the question of which is better, term life policies or whole life insurance policies. The truth is that it works differently for everyone. There are certain advantages and disadvantages of both these kinds of insurance policies and what I will endeavor to do is to throw some light on the various pros and cons of each. I would leave it up to the consumer to choose which one is suitable to them.
As far as whole life insurance goes, as long as you pay your premium regularly, you will be covered till death or till you touch 100 years of age, whichever occurs first. You can also build actual cash value with a whole life insurance. This is something that a term policy won’t offer you. The basic working of whole life insurance is that some of your premium goes towards the purchase of your life insurance, whilst the rest is stored for the future. This stored money is aimed at providing you with aid as you grown older. You are even permitted to borrow money from this account, just as long as you pay it back. This gives you added security incase of life emergencies or urgent and sudden necessary expenditure.
On the downside though, whole life policies can be expensive and the premium you pay would definitely be more than you would for a term policy. For someone not so young, the savings account facility is not necessarily a good idea because they wouldn’t be looking to save money anymore. A savings account makes sense for a young person, but not always for an older person.
As the name suggests, a term life insurance policy is one, which you can buy for a stipulated time period and can go on renewing it if you so wish. For instance, you can purchase a term policy for 15 or 20 years and then can renew it after the term is over. The fact that the term life insurance policy does not offer a savings account facility can be looked at as a drawback. You only buy life insurance with a term policy. You also have the option of rolling over some term policies, like the guarantee term.
The following is an example of the kind of circumstance for which the term policy would be a good idea. Suppose the husband is the sole breadwinner of the family. He is middle aged and his children are grown up. In this case, the family needs some assurance that in the event of something unfortunate happening to the husband, they won’t have to worry about their financial well-being. This is an instance that would call for the term life insurance policy to be purchased.
Given the pros and cons discussed above, it is easy to see how one policy can suit one individual and yet not another. It is thus best if you find out all the details regarding these insurance options and take a decision depending on your particular needs.
Related posts: