Term Life Insurance Articles
How Coverage Levels Compare Between Whole Life And Term Life Insurance
2010-01-29
Most consumers choose either term life insurance or whole life insurance when planning for the future. Other forms of life insurance are less popular because these very general policy types allow almost limitless flexibility. Deciding between the two can be difficult, especially if you're not sure what you can afford for premiums, or how much coverage you will realistically need. Therefore, it's important to know what differentiates whole from term life insurance coverage in order to make an educated purchase that will accomplish your insurance goals.
Coverage levels between the two policy types are quite different. For the same amount of money, a term life insurance policy will provide much more coverage for the named beneficiaries. Whole life insurance typically has a fairly low coverage level, at least in comparison. This is because whole life insurance is an investment, while term life insurance is not. After a certain point in a whole life policy, the policy holder will be able to draw out the premiums that he or she had been paying into for years, with a small amount of interest added on. With a term life policy, the premiums paid into the plan are simply lost at the end of the term.
However, that doesn't mean that a whole life policy is necessarily better than a term policy. If an individual needs a lot of coverage, the term policy offers the better deal over a long span of time. Also, if an individual only needs coverage for a short span of time, such as 10, 20, or even a single year, a term life insurance policy will offer what they need, while a whole life policy cannot. Many financial experts also note that the returns on a whole life policy are fairly low, and investment strategies such as IRAs will return far more in the same amount of time. Many buyers, therefore, pair a term life insurance policy (that has a low premium) with an investment strategy, rather than opting for a whole life plan.
When making a decision as to which type of life insurance is right for you, it's best to look online for term life insurance quotes as well as whole life quotes, and weigh the coverage level you need against potential premium costs. If you're still on the fence, it's worth considering a convertible term life plan. These policies offer low premiums, and after a certain amount of time, they can be changed from a term to a whole life policy. Talk it over with your insurance agent since both policies offer great security and peace of mind.
