Term Life Insurance Articles
When A Term Life Policy Makes More Sense Than Universal Life
2011-11-19
Most people don't think about life insurance until it's too late. Suddenly you're an adult with a spouse and children with other responsibilities that require you to investigate life insurance. Whether you do your own research on the Internet or contact an agent, the first question to ask is what kind of life insurance do you need: term or permanent? There's a basic difference between the two. Term insurance is coverage a person buys for a specific time period; permanent insurance, like universal life insurance, is for an indefinite period and builds up a cash value. Choosing the wrong type of life insurance for your circumstances can damage your present and future finances, so it's important to get it right. Here are some circumstances when term life is the better choice than universal life.
Term life insurance is a popular choice with those needing coverage to protect a young family. In the event of the policy holder's death, he or she needs to think of how the family or dependents would survive financially. How would the mortgage be paid? Debts? College tuition? Needing to support a family even when you are gone is a motivation to choose the coverage available through term life. Term life premiums are also less than those of universal life insurance. For younger people juggling many competing financial needs, choosing term life can free money that is needed now for other obligations.
Term life is also popular with people who only want coverage in the event of their death and want to invest the money they save from paying lower premiums either in stocks, certificates of deposit, or other investment instruments. Although one of the benefits of a universal life policy is that a policy holder can accumulate cash value by building up savings, it's a truism that higher returns can often be found elsewhere. For those who are not interested in the savings account aspect of permanent life insurance, choosing term insurance makes a lot of sense.
People needing to keep their options open are also attracted to term life. Term policies are usually renewable and can be purchased for periods of 10, 15, 20, 25 or 30 years. This offers a policy holder a lot of flexibility. For example, when a child is entering college, a couple may be concerned that tuition can be paid for in the event of their deaths. Purchasing a term policy covering those years would be the perfect choice. Term insurance is ideally suited to handle life insurance coverage for short-term needs.
Purchasing life insurance is a major decision. Be sure to do research and comparison shop before buying.
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Most people don't think about life insurance until it's too late. Suddenly you're an adult with a spouse and children with other responsibilities that require you to investigate life insurance. Whether you do your own research on the Internet or contact an agent, the first question to ask is what kind of life insurance do you need: term or permanent? There's a basic difference between the two. Term insurance is coverage a person buys for a specific time period; permanent insurance, like universal life insurance, is for an indefinite period and builds up a cash value. Choosing the wrong type of life insurance for your circumstances can damage your present and future finances, so it's important to get it right. Here are some circumstances when term life is the better choice than universal life.
Term life insurance is a popular choice with those needing coverage to protect a young family. In the event of the policy holder's death, he or she needs to think of how the family or dependents would survive financially. How would the mortgage be paid? Debts? College tuition? Needing to support a family even when you are gone is a motivation to choose the coverage available through term life. Term life premiums are also less than those of universal life insurance. For younger people juggling many competing financial needs, choosing term life can free money that is needed now for other obligations.
Term life is also popular with people who only want coverage in the event of their death and want to invest the money they save from paying lower premiums either in stocks, certificates of deposit, or other investment instruments. Although one of the benefits of a universal life policy is that a policy holder can accumulate cash value by building up savings, it's a truism that higher returns can often be found elsewhere. For those who are not interested in the savings account aspect of permanent life insurance, choosing term insurance makes a lot of sense.
People needing to keep their options open are also attracted to term life. Term policies are usually renewable and can be purchased for periods of 10, 15, 20, 25 or 30 years. This offers a policy holder a lot of flexibility. For example, when a child is entering college, a couple may be concerned that tuition can be paid for in the event of their deaths. Purchasing a term policy covering those years would be the perfect choice. Term insurance is ideally suited to handle life insurance coverage for short-term needs.
Purchasing life insurance is a major decision. Be sure to do research and comparison shop before buying.
