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What Is a Whole Life Insurance?
The Importance Of Life Insurance
To really highlight the importance of life insurance, all you have to do is remember that your parents paid your life insurance premiums and it amazes you that at that time they knew how important it was for you. You are aware of the importance of insurance because of your parents.
How will that knowledge leave you feeling when it comes to your children, your significant other, your nieces, and nephews, your friends? It is easy to see that you have strong feelings for those in your life. Of course, there is always the possibility that you or your loved ones will lose their life someday just like your parents lost their lives. So getting life insurance is something you should be thinking about as we all get older.
Cost of Whole Vs. Term
All insurance comes with a price, but even being sure of your protection, getting a big shocker on your insurance quote would be a major downer. Here are some tips to understanding how to find the best coverage for your needs and being sure to get an accurate quote.
Whole or Term Life
First, you need to decide whether you need term (level) or whole life (permanent) life insurance. Whole life is much like it sounds – it’s a life insurance policy for your whole life. For that reason, this type of life insurance is sometimes referred to as permanent life insurance. As a term or level policy, it’s designed to provide continuous coverage for a specific amount of time, after which it expires. Once it expires, you have to buy a new policy. Because it evaporates, the term life is less expensive than the whole life.
For example, if you’re 20 years old, you need to buy a term life policy for approximately 20 years. As soon as you hit 40 years of age, you must look elsewhere for life insurance. According to the market, you have two options, term and whole life insurance.
Age
Whole Life policies can be purchased on infants and young children, and the premiums are so small that they can be included in a regular family insurance program.
Is a Whole Life policies right for me?
Whole life policies are comprehensive insurance that offers protection for your family in case of unexpected events. Its guaranteed cash value allows the policy holder to borrow money against this cash value.
Some of the financial advantages of a whole life insurance policy include:
- Guaranteed return of premiums: Whole life insurance policies are paid back upon maturity in case of natural death. The policyholder doesn’t have to worry about the initial investment, because the insurer will pay the money back in full along with the premium.
- Bankable cash value: A whole life insurance policy can provide liquidity to the policyholder due to the bankability of its cash value. If the policyholder already has an existing life insurance policy, he or she can use the cash value to pay premiums on the existing policy.
- Automatic reinvestment: All dividends and bonus payments are reinvested automatically into the policy. This saves the policyholder the time and energy of managing his or her investments and makes the investment process more systematic.
Gender
Know the difference between term and whole life insurance is not easy. With so many different types of life insurance available, from whole life to term life to universal life, it can seem like an insurmountable task. But knowing which types of life insurance are best for you doesn’t have to be overwhelming. Here is a quick breakdown of the two types of policies.
Term Life Insurance: Term life insurance policies only pay out if you die within a certain length of time, also known as the term. This means that you only get a payout if you die within a certain time period, such as the next 10 or 20 years. However, term life insurance won’t pay out if you die past the expiration date. Term life is offered for a variety of durations, and most people pick a 10 or 20 year policy as a way to ensure that you don’t outlive your payout.
Whole Life Insurance: Whole life insurance policies pay out if you die at any time while the policy is valid. This means that you get a payout even if you die after the expiration date. This can be a good deal if you’ve outlived your term.
Health
And life insurance are expensive. And the vast majority of the time you won't need it. But when you do, it will make a real difference in quality of life and throughout the process. I first got my life insurance when I got married. My wife had a small sum that her father left her, and we each bought some. It was a few hundred dollars a month, and we got a good death benefit if we needed it.
I was an idiot about my parents health insurance. I could have covered them for a lot cheaper. When you reach 50 or 55 you may want to have a talk with them to see if they still need it.
I mention whole life so you know what they are talking about and can have an intelligent conversation.
Personally, I would estimate that the vast majority of people get life insurance for the death benefit and not for the cash value.
If you buy whole life and die after 10 years, the cash value is small. It's a sort of personal pension that doesn't get big until you are old and while nothing is guaranteed, it's probably safe to say there is some correlation between it and your life expectancy.
Whole Life and Term Life are usually matched against each other and where they rarely match exactly, the term life policy has consistently lower premiums than the Whole Life one.
Occupation
Code: 00B – Miscellaneous Occupations
Life insurance is an important part of a properly balanced financial plan. When used correctly as a tool, it can help ensure the long-term security of you and your family.
Residence
Or No-Residence?
When picking out the type of life insurance you need, one of the first decisions you need to make is what type of policy to get – term life, whole life or a combination policy.
For all the talk on long-term, cash-value life insurance, the bulk of life insurance is still short-term, term life, according to figures compiled by the NAIC.
Better-informed long-term, equity-based life insurance might be popular, but it makes up a mere 3 percent of life insurance policies. Those policies generally have internal adjustments to allow them to fall into a term life category.
That certainly still leaves the majority of coverage as term life, which account for around 91 percent of policies. That’s the majority, even with the popularity of retirement-based life insurance policies and no-death-benefit coverage, which pick up a combined 8 percent share.
Type
There are basically two different types of life insurance policies – term life and whole life.
Term life insurance is temporary insurance that helps to replace the income of the insured party in case of death. Term life insurance policies usually don’t pay any benefits to the insured party until the death of the insured except for the first dollars of premium paid in case of early cancellation of the policy.
Whole life insurance, on the other hand, is permanent and covers the insured throughout his lifetime. Whole life insurance is much larger than term life insurance in the sense that it has bigger policy face values, it can insure for more policy years, and the premiums are much higher – lasting for the whole life of the insured.
Such life insurance protects the beneficiaries by giving them a lump sum of money upon death of the insured. However, this lump sum amount is not guaranteed in case of early policy cancellation.
Benefits of Term vs. Whole
If you’re looking for a low-cost, basic kind of insurance to provide financial protection for you and your family in case something bad were to happen, term life insurance just might be right for you. The best term life insurance quotes online can be had for just a few dollars a month. And once your term policy is up, that’s it – you’re done. No need to make another premium payment.
How Much Does Term Life Insurance And Whole Life Insurance Cost?
There is a fundamental difference between term and whole life insurance. In other words, the two types of insurance policies have a different risk/benefit package.
Generally speaking, term insurance is designed to be affordable, and its coverage lasts for a predetermined period of time. Whole life insurance is designed to be long-term, and it is paid for using installment payments over a period of time (usually until the death of the insured individual).
A Little Bit More About Whole Life
Vs. Term Life
The two most basic types of life insurance are whole life insurance and term life insurance.
Whole life insurance is the traditional version of life insurance and is more intensive. Here’s how it works: Whole life insurance is an investment that lasts your whole life and is used to pay for your life insurance policy and the face amount (the amount that will be paid to your beneficiaries).
The policy lasts for the duration of your life, but not forever. Whole life vary from insurance companies, but they’re often around 30-35 years in length. At the end of the term, the policyholder gets to choose how to use the paid-up value: either convert it into an annuity or cash it out.
Term life insurance is a traditional, but simplified version of whole life insurance. Instead of a policyholder contributing a small amount for a period of years, term life insurance requires a lump sum payment in order to pay for the policy for a certain amount of time.
Term life insurance is more affordable than whole life. It also comes with a set amount of money that will help your beneficiary in the event that you pass.
Whole Life Insurance Companies
Here is a list of the top whole life insurance companies, which fall under the category of whole life insurance companies along with their top life insurance products. These are whole life insurance companies whose whole life insurance products are rated A+.
Does the Cost of Whole Life Insurance Make it Worth It?
What Is Term Life Insurance?
Term life insurance is the purest form of life insurance. A term life insurance policy protects you, your spouse, and any dependents you may have in the event of your death. It is a basic financial planning tool. Term life insurance pays out a predetermined amount of money to your family upon death. When you have a term life insurance policy, you can choose how long the coverage will last … and how much protection you want. You can choose between 10, 20, and 30 year terms.
Does Whole Life Insurance Get Better With Age?
Whole life insurance functions very similarly to term life insurance, except that it lasts for your entire life … or at least until you choose to cancel the policy. Whereas term life insurance is pure protection, whole life insurance actually comes with an investment component. You are paying for the policy, and that premium goes toward building cash value. At some point, once enough cash value has been built, you could convert your policy to a permanent insurance policy. But you don’t have to. You can always leave it as whole life.
Unlike term life insurance, you don’t choose how long your policy lasts. It can last for your entire life.