Term Life or Whole Life: Which One is Better?
Which insurance is right for you? Term life insurance and whole life insurance each have benefits, but it really depends upon the needs of the individual and plans for the future. Term life insurance offers level premium and level death benefit are available within a period of time, usually a couple of decades. Permanent insurance generally provides death benefits and cash savings. Permanent insurance options are variable and can include universal life, whole life, variable life and other variations on these plans. Initial premiums for permanent insurance is higher than term life insurance but some of the premium can provide a buildup of cash value.
Term Life Insurance
Term life insurance is a good option for young families and individuals, who are better off protecting themselves against the loss of income. A medical examination is required.
While this insurance does not provide cash value, it does offer a cheaper alternative to whole life insurance. Shopping for this insurance is easier than shopping for whole life. The term life insurance market is competitive and this benefit is passed down to the customer.
Permanent insurance is for full life protection. It will give you a guaranteed level premium, and will also accumulate a cash value. This means that members of this policy will be able to borrow against the plan tax-free if this is important to the purchasers. This accumulated cash value can be used for retirement, education or other goals. Permanent insurance plan premiums are initially higher term life coverage policy.
Considering Multiple Situations
Take into consideration the age, health status, and financial contribution of the members who are to be insured. The head of household will likely want to take out a larger insurance policy than dependents, for example. However, a dependent with a terminal illness will need to have coverage that will likely provide for the treatment that is needed throughout their life, even if they are not likely to die soon. Even if the insured member is young, and term life insurance would be considered typical, a permanent life insurance provides savings that is better suited to this situation.
Other important factors in considering what life insurance plan should be used are interest rates. Retirees are likely to want life insurance that is coverage for dependents and the funeral expenses for their spouse. A successful retirement plant will often take the place of insurance, so the term life insurance option will be the most common option advertised. This is often referenced as a default option. Although, permanent life insurance can be a great option for younger individuals who would like to accrue value through their life insurance plan, although the insured individuals may be in poor health. Both are great options.