Senior Term Life Insurance
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Senior Term Life Insurance

Term Life Insurance Vs Whole Life Insurance - Important Differences


Various forms of whole life insurance have been around for decades upon decades. Although certain changes have been made over time, especially to the savings and investment portion of the policy, it's still basically the same concept. Term insurance, on the other hand, is new to the game and came on the scene as a welcome relief in the 1970s. Before buying anything however, these are things you need to know about Term Life Insurance vs Whole Life Insurance.

The cheaper insurance is term. It's so much cheaper because you are only buying the insurance. You aren't paying high premiums that the insurance company is going to invest for you. You are also only paying for a set period of time, or the term, and the insurance company is betting - in the truest sense of the word - that you won't die during the term of the policy.

With whole life, because you are paying for and are covered for your whole life, they know they will absolutely need to pay the death benefit sooner or later, as long as the policy stays in effect.

If you want nothing more than insurance, and that should be everyone's goal, you only need a term life policy. Let's say you just got married and you want to get a policy for you and your wife. At the age of 28 you two can get a 20 year term policy with maybe $250,000 coverage for each of you, for less than $100 a month. If you have children, you can add them all on a rider for a few dollars a month. This is one rider per policy, not per child! If you have a rider on your children for $10,000, you can have 7 kids and still be covered.

Now, let's say you want to check out whole life policies. For $250,000 coverage for each of you, you'll first need to buy two separate policies, doubling your expense. Your premiums each month will be at least $500 for both policies. If you have kids, again, a separate policy is needed for each one.

If you have a term policy you will have the option of renewing at the end of the policy. Your renewal rate will be much cheaper than if you were to start at that age and try to buy insurance. Usually the insurance companies don't require extensive medical testing or anything like that.

When it comes to insurance and planning on providing for your family if something happens to you, it's never a good idea to mix insurance coverage with investments. In the case of whole life, what your agent doesn't make clear to you when you buy the policy is that when you die, your family only gets the actual death benefit - the face value of the policy. They don't get your investments! The insurance company keeps that money! In effect, you can only benefit from any of that while you're alive.

If you happen to borrow any of this (your) money, which you are allowed to do by the way, your death benefit is decreased by that amount until you pay yourself back. With interest!

 

Senior Term Life Insurance
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