Term vs Whole Life Insurance

Making a decision to choose between term life insurance and whole life insurance can be a headache if you are not sure about the difference between the two of them. It is important that you are equipped with the knowledge of their differences in order not to make the wrong decision. This article is all about term vs whole life insurance, so if you are interested, keep on reading!

The first difference of term and whole life insurance is the term of their coverage. Term life insurance provides you with security for a certain term or time. Normally, it can be renewed until the insurer is seventy five years old. However, whole life insurance is different in the sense that it provides security for the insurer’s whole life or until he is 100 years old. If you want to take this aspect of difference to choose between this two types of insurance, basically, term life insurance is more suitable for people with short term personal financial goals and whole life insurance is designed for people with similar long term goals.

Next, there is tax deferred cash value for investments made during the term of whole life insurance. The insurer has to be prepared to fork out higher premiums for whole life insurance because of the nature of investment involved. Insurance companies have a tendency to be cautious when investing whole life insurance premiums to low the risks involved to the minimum level. However, for term life insurance, you are free to choose your investment strategy if you are clear about the risk and have sufficient knowledge about market investments. An example of term life insurance is parents buying for their children for a term until their children graduate from higher education institutions.

Therefore, a term life insurance would be less expensive and it stops to exist when the term expires. There is also no tax deferred cash value. As time goes by, the premiums will increase rapidly and can become too expensive which might be not affordable. Whole life insurance can protect your loved ones from suffering problems related to financial independence for lifetime. It is a personal choice based on many factors which determine whether you want protection financially for a term or whole life.

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