It is common practice for buyers to do a term and whole life insurance comparison before signing on the dotted line.
Many people only consider the differences in premiums. There should be more taken into consideration.
Let us take a look at what should be relevant when comparing. Think about what is important when you do a term and whole life insurance comparison.
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Term And Whole Life Insurance Comparison
- Term Insurance
Term insurance is temporary insurance. Some term policies last longer than others but they are still temporary. The most popular term policies are 5 year, 10 year, 15 year, 20 year, 25 year and 30 year term. Each policy is applied depending on the buyers particular need. At the end of the term the insurance coverage ends.
The big question is, what if you want to continue your policy. Some policies can be continued but at a much higher premium at that point. In most cases the cost is beyond the policy owners ability to pay.
- Whole Life Insurance
One alternative to term life is whole life insurance. The beauty of this policy is that it can be kept up until age 100. You are therefore unlikely to need the coverage and not have it. Whole life premiums are much higher than those of term policies.
Keep in mind though that whole life has cash values. If you buy a participating policy you may even earn a dividend on your policy. I say “may” because dividends are not guaranteed, they depend on the success of the company’s investments and how efficiently they keep down expenses.
The cash value plus dividends over time, in some cases, exceed the premiums paid. Because of this whole life may be less costly than term. There are those who suggest you buy term and invest the difference. This idea will work depending on the type of investment you choose. In many a case the investment doesn’t yield you a profit.
Also keep in mind that if you buy a 20 year term policy it ends in 20 years. You may find that you need insurance at that time. You must qualify for it though. Remember you will be 20 years older then, will you be in good health then?
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