Choosing Between Term Life and Whole Life Insurance Coverage - What is the Biggest Difference?
Choosing Between Term Life and Whole Life Insurance Coverage - What is the Biggest Difference?
By Christy Love
The world of finance and insurance can be overwhelming if you don't understand all the terms and lingo associated with it. Probably the most important decision you have to make when shopping for a policy is whether you want to buy whole or term life insurance.
So what's the difference?
The biggest difference between the two is that a whole policy will last your entire life, while a term policy only lasts for the length of the contract. Whole life insurance does have one exception to lasting your whole life, and that's if you live to be 100 years or older. However, you do get a nice check on your 100th birthday under a whole policy, so you never lose the value you've spent your entire life gaining.
Whole life insurance also works as an investment account in some ways, allowing you to borrow against it if you get into a financial bind during life. This is called a living benefit, and it basically means that the policy collects cash via an interest rate, much like a savings account. You can also choose other ways to invest the money in your whole policy. You can even use the policy as collateral for a loan if you desire.
Term life insurance provides you with temporary coverage that lasts for a set amount of years, which is determined at the time you buy the contract. A term policy only pays out in the event of your death, so there is no living benefit with this kind of insurance. However, a term policy is cheaper than a whole, so this may actually be an attractive way for you to get life insurance.
Remember, rates and premiums vary from insurance company to insurance company, so be sure to compare rates from at least five different companies before you buy a policy. The last thing that you want to do is to buy a policy, only to realize that you could have gotten the same coverage for less money.
http://www.LifeInsurance4All.com/ is a free tool that you can use to compare several quotes and policy differences side by side, without having to apply for insurance. Christy Love is a retired life insurance agent with over 30 years of experience in helping people protect what matters most... their family.
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