Choosing Between Whole Life and Term Life Insurance

Having coverage in form of insurance is of great benefit to the loved ones you have listed as your beneficiaries. Getting life insurance is very important, if one is to consider the fiscal state of the grieving family,they leave behind in the event of their passing. The real dilemma now hits you. What type of package would be beneficial to you before death Deciding? on whether you should go with whole life insurance or term life insurance is a tedious exercise. Both whole life and term life insurance have their merits and demerits, which should be looked at keenly before making the decision.

Whole life insurance is the insurance policy that is only terminated in the event of death occurring to the policy holder. Before requesting for your whole life insurance quote, there are some facts you need to know. The premiums paid are fixed and the well-knownclaim, the death benefit, is surrendered to the policy holder’s beneficiaries. This operates like a fixed deposit bank account where you are meant to deposit regularly and only withdraw once maturity is reached. In this case, the maturity is the death of the policy holder. Should the policy holder wish to terminate the contract and is not willing to await his demise for one reason or another, he is reimbursed the total premium value and the interest accrued unless dividends have already been paid.

Term life insurance is the kind of insurance where one of two things terminates the contract. These are the death of the policy holder and the lapsing of the term duration. In case, the policy holder dies, the beneficiaries receive the amount indicated on the contract. Should the time agreed on mature, the insured has a choice of either prolonging the coverage or converting and make the policy a whole and permanent life insurance policy. Of course if they consider renewing the policy, new rates apply.

The differences do not just stop at the definitions, as several other differences can be seen upon scrutiny of these two packages. One who is covered by a whole life insurance policy has the opportunity of borrowing against the policy whereas the person protected by the term insurance policy has no access to such facilities. Taxation is also different. Beneficiaries of both policy holders do not have any taxes charged on the known claim. However, the person covered by term life policy will be taxed should the period agreed upon mature, whilst they still live. It can be pointed out that following the above factors, it is clear that whole life policies are for individuals with long-term fiscal aspirations whereas term life policies are meant for those individuals with short-term financial goals.

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