Term Life Insurance or Whole of Life Insurance Policy?

When looking for life insurance, it's important to find the best policy for your own unique needs. There are so many web sites offering online discount life insurance, so it's a common mistake made by many, to end up with a policy that's not suitable. by MichaelPettigrew When looking for life insurance, it's important to find the best policy for your own unique needs. There are so many web sites offering online discount life insurance, so it's a common mistake made by many, to end up with a policy that's not suitable. Many people need clarification regarding the various types of life insurance, and which is best for them. Term Life Insurance: With term life insurance you pay for a predefined term, and are covered for that term (normally the same term as your mortgage). This means that term life insurance only offers protection for the duration of the mortgage, and is usually of little value once your mortgage is fully paid off. However, term insurance is cheap, and the cost can even reduce over time. There are five main forms of term life insurance, and these are as follows: * The first type is known as level term insurance, and it is a very popular policy. Here, the premium costs are locked in for the entire term of the policy. This means you pay the same amount every month/year for the term of the policy. * The second type of term life cover is known as escalating term insurance. This type of scheme means that you pay an increasing amount each year, so the payout at death also increases. They are generally low cost policies, and are more suited to first time buyers and the young. However, they can become more expensive as you get older. * The third type of term cover is known as decreasing term insurance. With this type of policy the monthly/annual payments stay exactly the same. However, the amount of protection reduces each year. * The forth type of term life cover is increasing term insurance, where the pay out on death increases. However, to make up for this increase it will be necessary to increase the premiums from time to time, in line with changing circumstances. * Finally, convertible term insurance is a type of term life cover that can be converted into an investment/insurance policy in the future. Normally, the value of such investments will be based on your health, at the time you bought the term insurance policy. Whole of Life Insurance & it's Advantages: Whole of life insurance covers you right up until the time of your death, providing that you keep paying your premiums. It can give a considerable lump sum to your family when you die, and it normally accumulates in value over the years. This type of policy is more expensive and complicated than term life policies. The investment you make earns some interest each year. So, providing your investment grows, your annual premiums can actually reduce over time. Also, there may come a time when the interest produced can cover all your future premiums, and as a result you may have no more premiums to pay on your policy. However, it's important to understand that it is possible the cash-in-value of a whole of life policy may actually be less than the amount put into the policy over it's full term. Summary: The decision of whether to buy a term life policy, or whole of life cover comes down to your own unique needs, and circumstances, and what you wish to achieve. The simplest form is a level term policy with a renewable option. This will allow you to get life insurance for as long as you may need it. On the other hand, a whole of life policy might suit you better if you need a policy that grows in value over the years. Both types of policy have advantages and disadvantages, and that's why it's always a good idea to get advice from a competent insurance adviser. About the Author: Best Insurance Quotes is a provider of low cost life insurance. Visit their web site to get better life insurance quotes

 

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