Term Life Insurance is Probably the Right Choice for Most People
When someone begins to contemplate purchasing a life insurance policy, they often find themselves torn between term life insurance and whole life insurance. Many people often feel somewhat confused by term life insurance in general. When many people think of life insurance, they think of whole life insurance since it has been available for decades whereas term life insurance is a newer instrument. Often people don’t fully understand that a term life product is something that can take a short period of time. It is important to not only understand the differences between term insurance and whole insurance, but to understand how term insurance can be more beneficial.
Time is On Your Side With Term Life Insurance
What is easily the most important aspect of term life insurance is understanding the time aspect. Whole life insurance is simple and straightforward. Once you start, you pay until the time comes that the insurance begins to pay your family in the event of an untimely death. While your premiums may fluctuate, if you choose to have it reconsidered, you can roll your investment into a new whole life insurance fund or other financial instrument. It is generally considered an entire lifetime insurance, hence the “whole” in whole life insurance. Term life insurance, on the other hand, allows you to pick out a term that you would like to cover. If you feel that you cannot pay the higher cost of a whole insurance coverage policy, you can start with a term policy that can turn into a whole package. If you are not too keen on life insurance but want to have some sort of coverage over a period of time than you can choose term life insurance. Term insurance allows you to only cover a period of time, allowing you to pick and choose when you are insured.
This allows you to work with time as well. If you feel that your rates may be too high with whole life, you should consider term life insurance. If you are in poor health but believe you can improve by changing bad lifestyle habits, you may want to consider whole life insurance. By choosing term, you can keep the term insurance going until you have managed to improve. Once you have improved, you can consider whole life that has a better rate due to your improved well-being.
This is where money comes into play. If you feel that you cannot afford an entire whole life insurance payment, consider term life insurance. While whole insurance is an investment allowing you some form of investment if you cancel the policy early. Whereas term life insurance is simple and to the point – you pay for coverage over a specified period of time. If you are just paying for the coverage, your price and rates are automatically going to be lower. This helps those who feel that whole life insurance payments are simply too much for them to handle at the current time.
Term life insurance is just that, coverage for a specific term. It can be short term, or it can be long term. Either way, it can cater to your needs more directly than a whole life insurance plan. Term insurance allows you to be pickier and offers premiums that are bare bones, hence more affordable. No asset accumulation is realized, just coverage. If you are concerned about timing, or about money, term life insurance is the best way for you to go.