Roughly categorized as a pre-need investment, life insurance falls into two categories - the whole life and the term insurance. What?s the difference between the two? Here are the key points.
If you want to continue paying the premiums of your plan, then you will have a whole life insurance policy that will cover for the lifetime. This type of insurance will let you avail all the benefits until you reach the age of 100 because it will earn cash value that starts in the first year of paying your premiums. The good thing of having this type of insurance is that instead of paying an increasing fee, you will just be paying the same amount for the rest of your life while in the term insurance, your premiums will increase every time you renew your policy. Aside from that, the whole life insurance will guarantee you a cash value, but both types of insurance should be paid continuously in order to avail their benefits.
You are able to build cash value with whole life insurance on a tax-deferred basis. Depending on your age when you purchase whole life, this can be a very good long-term investment. It not only gives you lifetime protection without ever having a premium increase but is also an enforced savings program. Of course the policy holder has the right to discontinue the whole life policy and receive the cash value at any time.
Accumulated cash values of whole life insurance could sometimes be greater than the guaranteed amount because the insurance companies could invest these premiums in a more profitable venture, thereby returning to the policy holder his share of the monetary investment.
As a policy holder of whole life insurance, the insured individual could also avail of a loan against his share of premiums in the company. Instead of borrowing money from other sources, the policy holder could apply for a loan in the amount commensurate to his contribution of the life premiums.
A minimum guaranteed benefit is offered on whole life insurance and the premium will never change. This is not true with term life insurance where the premium is subject to increase on renewal. Earning dividends is another benefit with whole life. Dividends are based on the overall return on the company?s investments. If you have a universal life insurance policy, you will receive interest that is adjusted on a monthly basis. A benefit of a whole life policy is that interest is adjusted on a yearly basis.
Before you make the decision to purchase whole life insurance, you should go over your budget and be certain that you can afford it. This will be a long-term investment so careful thought needs to be put into what you can afford to pay for it. If whole life insurance is out of your budget?s range, you should still buy lower priced term insurance at a young age and perhaps add whole life coverage when you can better afford it. You also need to keep in mind that once you have obligated to a whole life insurance policy, the rate will stay the same for the rest of your life. These policies cannot be reduced to a lesser value once you have committed to purchase them but they are very good investments for those who can afford them. - 29970
If you want to continue paying the premiums of your plan, then you will have a whole life insurance policy that will cover for the lifetime. This type of insurance will let you avail all the benefits until you reach the age of 100 because it will earn cash value that starts in the first year of paying your premiums. The good thing of having this type of insurance is that instead of paying an increasing fee, you will just be paying the same amount for the rest of your life while in the term insurance, your premiums will increase every time you renew your policy. Aside from that, the whole life insurance will guarantee you a cash value, but both types of insurance should be paid continuously in order to avail their benefits.
You are able to build cash value with whole life insurance on a tax-deferred basis. Depending on your age when you purchase whole life, this can be a very good long-term investment. It not only gives you lifetime protection without ever having a premium increase but is also an enforced savings program. Of course the policy holder has the right to discontinue the whole life policy and receive the cash value at any time.
Accumulated cash values of whole life insurance could sometimes be greater than the guaranteed amount because the insurance companies could invest these premiums in a more profitable venture, thereby returning to the policy holder his share of the monetary investment.
As a policy holder of whole life insurance, the insured individual could also avail of a loan against his share of premiums in the company. Instead of borrowing money from other sources, the policy holder could apply for a loan in the amount commensurate to his contribution of the life premiums.
A minimum guaranteed benefit is offered on whole life insurance and the premium will never change. This is not true with term life insurance where the premium is subject to increase on renewal. Earning dividends is another benefit with whole life. Dividends are based on the overall return on the company?s investments. If you have a universal life insurance policy, you will receive interest that is adjusted on a monthly basis. A benefit of a whole life policy is that interest is adjusted on a yearly basis.
Before you make the decision to purchase whole life insurance, you should go over your budget and be certain that you can afford it. This will be a long-term investment so careful thought needs to be put into what you can afford to pay for it. If whole life insurance is out of your budget?s range, you should still buy lower priced term insurance at a young age and perhaps add whole life coverage when you can better afford it. You also need to keep in mind that once you have obligated to a whole life insurance policy, the rate will stay the same for the rest of your life. These policies cannot be reduced to a lesser value once you have committed to purchase them but they are very good investments for those who can afford them. - 29970
About the Author:
Graham McKenzie is the content syndication coordinator a leading South African Life Insurance and Life Cover portal. For tips on how to save on your life insurance visit our website.
