Term and Whole Life Insurance - the Differences

Most people want to know what the real difference is between Whole life insurance & Term Life Insurance and which the best option for them is. For obvious reasons because I enjoy helping, the best that I can really do is explain the difference between the two and the pro's and con's of each type of policy. You the consumer will understand the differences between both policies because you need to know what you're getting into before you buy.

Whole life insurance provides you insurance throughout your lifetime, as long as you keep up with the premium payments. The policy generally, will cover you up until your death or age 100, whichever occurs first. Some of the most known pros of a Whole Life Insurance policy are that you will also build an account that has actual cash value. Some of your premium goes to buy life insurance, while the rest is placed in safekeeping for the future. You can actually borrow against this account if you need to, but it needs to be paid back. This ability to borrow gives you a bit of piece of mind in case of expenses at college, auto repairs or any other of life's little emergencies.

Some of the known cons of Whole Life Insurance are that it can be very expensive. The monthly premium payments for whole life insurance will be much higher than a term Life insurance policy would be. Another con is that the cash value pays very low interest and as you get older the savings account feature becomes less attractive. For someone young and just starting out, this makes more sense because they have their entire lives ahead of them, but for someone middle aged or above, I'd buy Term and invest elsewhere.

A Term Life insurance Policy is also known as "pure life insurance" because that's all you're getting. Some obvious differences between the two policies are, unlike Whole Life insurance policies, there's no savings account that accumulates or to borrow against. You are simply paying and getting insurance. Another disadvantage is that, some term policies are only for that specific "Term" or time frame, not your entire life. Some Term life insurance policies, such as Guaranteed Term, can be rolled over.

Most term life insurance policies only last a specified period of time. For instance, the best use of this policy is if the "breadwinner" of the household who is middle aged, the kids are grown, but still in college, he or she has been paying on their major assets, like their home for example. For several years and they need some security to make certain that if anything happened, everything would be taken care of so that the family could go on without any issues, other than the loss of their loved one. A 15 or 25 Year Term Policy might be the best option for the fictional example above, depending on their individual living circumstances.

Please, now I am sure you know why it's difficult to give counseling to people without knowing their specific circumstances. But just learning the differences between whole life insurance and term life insurance these two more popular types of insurance policies should help you immensely in the future. You can do comparison shopping online and good luck.

By: Raymond Nwambuonwo

Life insurance ways (RAYS Company) is our recommended resource for all types of articles about Life insurance ways on the internet. lifeinsuranceways.blogspot.com Raymond Nwambuonwo is the founder of Life insurance ways. He can be reached for more information at his website lifeinsuranceways.blogspot.com Raymond Nwambuonwo has been a contributing author for this website and is an acknowledged expert on articles about Life insurance ways. He can be found on the internet at this website: lifeinsuranceways.blogspot.com

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