There are a number of different types of insurances being offered. For this reason, understanding insurance and its types can be confusing for many individuals out there. When it comes to life insurance, there are two common types: Term and Whole Life insurance. Choosing between the two requires careful thought and understanding before making your final selection.
To help you out, we’ve enlisted the common differences between term and whole life insurance so that you can get all the information you need regarding what fits best in your case. Let’s take a look.
What to take into consideration when choosing the type of life insurance best suitable for you?
There are two important factors that you as a decision maker should consider before opting to choose the best form of life insurance. After all, life insurance is termed a powerful and flexible tool that can assist you in meeting your financial objectives such as helping to build financial assets as well as providing the greatest form of financial security. Two important factors to take into consideration include the following:
What are the financial needs of the beneficiaries involved
Term Life Insurance
- Provides benefits related to death only
- Paid benefits are only provided if you die while the policy terms are in effect
- It can only be purchased from a specific time period which is known as a term
- It is considered as the easiest and most affordable life insurance to purchase
- After the age of 50 years, this type of insurance companies tends to increase in price
- If the coverage policy is to be extended beyond the term length, it must be renewed
- This type of insurance policy can be converted to a whole life type of insurance
- Alongside use as a permanent life insurance policy plan, it can also be used as a temporary additional coverage
Whole life insurance
- This type of insurance policy will cover you for life
- A health examination must be passed before qualifying for this type of insurance
- A fixed sum of cash as well as death benefits are provided during the lifetime of the policy
- In cases where a medical exam isn’t preferred or required, the cost of the policy is much higher
- A minimum of 12 to 15 years is required to build up a decent cash value
- In cases such as estate planning, this type of policy is a great choice
- A certain amount of the cash value can be withdrawn during the policy’s lifetime
With the following information being mentioned above, making an informed choice to find the best life insurance solution can now be done with great ease.