Most people who decide to opt for a life insurance policy will be told by friends or colleagues that they got a good one online. So, you will also follow their lead and request a life insurance quote on line. Now, you will be given quotes of different policies and this could confuse you. Hence, before requesting a life insurance quote on line, you need to first understand about the different types of life insurance policies available for you. Only knowing about each in depth can help you choose one that will suit your personal needs.
Life insurance is divided into the following main and sub-categories:
• Temporary
o Term life insurance
• Permanent
o Whole life
o Universal life
o Limited pay
o Endowment policies
Of these, term life insurance and whole life insurance are the most popular. By making a comparison between whole life vs term insurance you can understand what is common between these and how they differ. Both policies serve the common goal of providing protection for your loved ones when you die. However, specific details like price and value of the policies are quite different.
Let us start making a comparison based on some key factors. This will help you understand the two types of policies a much better. When we compare their values, whole life insurance will gain value over the period of the policy. This is because part of the money paid as premiums will earn dividends and interest depending on where the insurance company invests them. The other part of your premium amount will go for death benefit. The cash value portion can be borrowed and used for emergencies.
Term life insurance does not have this cash value portion and you only get the face value of the premium amount that you have paid. Since whole life insurance has a cash value, it costs more than life term policy. Since whole life is permanent policy, the premium will not change throughout the life of the policy. A term life insurance costs less but when the term is over, it is possible that the insurance rate can increase. If you take a level term policy, then the rate will remain the same for the entire period.
However, those who want low cost life insurance must take a term life insurance when young and in good health. You must undergo a complete medical exam and if the test results prove that you are healthy, then you can avail attractively low insurance rates. As far as the period of both policies are concerned, whole life insurance will continue for the entire life of the individual or if the policy is canceled for some reason. A term life insurance on the other hand is taken for specific periods of time. Usually this period varies from 10-30 years although the annual renewable term life insurance is taken for one year at a time.
The main drawback that term life insurance has is: the policy will not be valid if the person outlives the policy. For example, if a person of 30 years takes a term life for 30 years, the chances of him living beyond the age of 60 are very high. To prevent loss of premiums, insurance companies offer policyholders the option of renewing their policy once the term is over or to buy a new policy. This will be definitely at higher rates since the individual will be older and could have developed some medical condition.
Both term and whole life ask the policy holder to undergo a thorough medical exam and the rates will be based on these results. Those who are reluctant to undergo medical test for any reason, they can opt for no medical exam term life insurance or whole life. This policy just requires the applicant to answer a few medical questions. It is quick to process but will result in higher insurance rates.
As far as payout guarantees are concerned, whole life includes face value and a death benefit payment whereas term life insurance gives only the face value to the beneficiaries. Now that you have gone through the details of these two main types of insurance policies, you can make an informed decision and choose the best one that will suit the long term needs of your family.
Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on term life insurance for seniors and life insurance no medical, visit his site today.
Walang komento:
Mag-post ng isang Komento