Tuesday, March 31, 2009
Term Life Insurance vs. Whole Life Insurance
By: Dan Hughes
There are two main forms of life insurance that people may have to choose between. These two types include term life insurance and whole life insurance, and, for the most part, people have no idea which type of life insurance is best for them.
With term life insurance, you are only covered for the life of the policy, while you are still paying the premiums, of course. Basically, this is the policy that makes the most sense for the majority of people out there, especially the couples that have kids. A life insurance policy is only intended to help the ones that have others dependent upon the life insurance holder. You do not want to continue paying premiums on your life insurance once your kids are no longer considered dependents.
With whole life insurance, on the other hand, the life insurance policy is designed to cover you for your entire life. It combines a term policy with an investment component, which could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against, which is why the premiums generally cost more than what term insurance would cost. As this “accumulation account” grows over time, the cost of your premiums may decrease over time.
Basically, what you need to ask yourself when looking for life insurance, is who you need to insure should anything happen. If you are generally healthy and have older kids, whether you may be single or not, whole life insurance probably is not the best way for you to go.
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