Know the differences between Whole life insurance and term insurance

Know the differences between Whole life insurance and term insurance
August 05 05:23 2018 Print This Article

Many people do exist in the world who gets confused about the difference between term and whole life insurance. They are unaware of the reason behind the difference between them. It is crucial for a person to compare the whole life and term insurance before opting, on what type may satisfy him/her. Both of the insurances have their own different characteristics and offer similar but different features.

Term life insurance mainly focuses on the whole life coverage. This insurance pays only to the designated beneficiary decided by the person having the insurance. Term life provides the option for buying at any period of time between one to thirty years.

On the other hand, the whole life insurance is a combination of the benefits of the short-term insurance along with investments. Examples of these following investments are bonds, money market certificates or stock issues. With time, the total sum paid in the policy can be borrowed against. Whole life policies are of three different categories: traditional, variable and universal. Provided with both term and life policies, one can never expect his monthly premium payment to increase.

As whole life insurance provides the customers with investment options, the customers would have to pay more for it. One needs to always consider that these are not the best investment options and it is preferable to invest the sum in a better convenient place from where one could get better output results. Their low-income rate makes them inefficient for best retirement investment plans. They are also renowned for their comparably high start-up prices and commission costs too.

If compared, term life insurance seems more convenient and affordable for the common people. Premiums begin to rise if a person purchases the plan after the age of 50 and gradually keeps on increasing its rates for ages after 50. There are a number of companies that do not sell their plans to persons with their age beyond 65.

Only the person buying the plan knows that it would suit him. So he should cautiously compare the term and whole life insurances before finally taking his decisions. Both of the plans have some advantages as well as disadvantages. In any of the two plans, there might be the one which could satisfy one’s personal requirement. So it is greatly preferable to compare and choose your desired plan before making the investment.

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Melinda Woodward
Melinda Woodward

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