RSS FeedWhich Is Better For You: Term or Whole Life Insurance?
Term and whole life insurance policies are amongst the most popular policies issued to people today. Term policies basically cover a fixed span of time such as twenty or thirty years. Whereas whole life policy covers not only the term of the policy which is your entire life but also any interest that has accumulated on top of it.
Term & Whole Life. In term life policies, there are two types of premiums: level term and annual renewable. The level term remains constant for the whole term of the policy and can be bought in increments up to thirty years while the latter increase its level of coverage as you age. On the other hand, the whole life policy has two elements: the mortality charge and the reserve. The mortality charge is the amount paid for insurance and the reserve denotes the investment component that earns interest.
But, Which One Is Best? While everyone’s situation is different, the best type of insurance policy for most people is definitely term policy for a host of reasons. The term policy is life coverage only and upon death the beneficiary receives a face value of the policy. The whole life policy on the other hand provides you with cash value that you can borrow against that accrues the longer you own the policy.
Costs. Overall whole life policies are a much more expensive route than term policies. I can remember that my wife and I were quoted something like $100,000 whole life policy with an investment portion that was going to cost over $100 a month. But, we ended up buying a level 30 year term $500,000 policy which only costs us somewhere in the neighborhood of $70 a month! Crazy, right?
Good Investment? No! Where it seems that saving more money in its investment portion is good for the long term, it really isn’t. The rate of return for most policies is small, in the range of 2% to 3% which will barely keep up with inflation. There are better investment opportunities than these available, and thus they can be qualified as forced savings.
...Cheap Whole Life Insurance- News
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