There are many people who find themselves unable to determine what manner of life insurance policy might be best for their family. Life insurance comes in two well known forms. These forms are whole life and term life. Each of these two primary forms will have benefits and negatives in regards to their usage.
Considering the Amount of Coverage Needed
When it comes to purchasing life insurance there are several questions that an individual must ask themselves. The buyer must ask themselves how much coverage they will need, how long they will need it, and how much coverage they can afford. There will often be a substantial difference between how much insurance an individual needs in comparison to how much they can afford, for instance.
Whole Life Insurance
Whole life insurance is a continual policy that is paid throughout the entire life of the individual from the moment the payments begin. These premium payments will remain the same and they are often quite a bit higher in cost than a term life policy. This is the major downside of a whole life policy. The main positive benefits of this policy type will generally be in the realm of coverage and the ability to withdraw money against the policy. These types of policies actually accrue interest overtime and people can use this money for emergencies if they need to.
Term Life Insurance
A term life insurance policy is in effect for only a set period of time. This type of insurance is generally acquired when someone is undertaking a dangerous profession or must travel frequently. The premiums are smaller initially, which is the main positive of this type. However, the the premiums increase over time and they do not accrue interest in the manner of a whole life policy. The individual cannot regain money spent on this policy unless the policy holder dies. Once the term of the insurance policy is up, the never is never regained.
A whole life insurance policy will cost more in the long run but it has the most return for the money. A term life policy is best for short periods of time wherein the extra security is needed.