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Should I Have Term Insurance or Whole Life Insurance

Updated on February 26, 2018

To begin with, understanding life insurances can be quite challenging. What exactly is a life insurance? What basically is a whole life insurance? How to choose between the two or what shall suit your family requirements aptly?

Given below is a detailed overview of both the terms and this would help you choose between the two easily.

What is the difference between whole life insurance and term insurance?

If you should choose a whole life insurance or a term insurance totally depends upon the financial requirements of your financial aims and beneficiaries as well. Life insurance to say the least can have been a great powerful tool and quite flexible in meeting various financial objectives; from offering financial security to developing financial assets and keeping behind a legacy.

Few important features of term life insurance:

  • Offers only death benefits
  • Offers you benefits only after your demise while the policy term in action
  • Most affordable and easiest life insurance to purchase
  • Becomes quite expensive, post 50 years old
  • The term has been to renewed is you wish to extend the coverage beyond the length of the term
  • Can be utilized as a temporary additional coverage along with permanent life insurance policy
  • Can be converted into whole life insurances

Features of whole life insurance

  • Whole life insurances give you complete life coverage
  • Whole life insurances tend to offer you with death benefits besides accumulation of cash value that generates during the span of the policy
  • You must qualify for an examination of health
  • Whole life insurances can be bought sans a medical test but an elevated price
  • It takes a minimum of 12-15 years to generate a good cash value
  • This is a good choice for estate planning
  • Cash value relies on how much the investment or return is worth
  • It has costly premiums than term life insurances, but can actually help you save your money over the policy life if it remains in action for a good amount of time.

What should you buy? A whole life policy or term insurance policy?

If you are 35 or above, have children and are the basic bread earner of your family, then you might want to purchase a term life policy that in turn would cover you family fully along with their financial obligations.

The add-ons like your living cost, debts, home mortgages and the education bills would help you to learn the policy’s face value that your family would be requiring if you have a premature death. The term length would depend on your children’s age and when you predict them to graduate from college.

On an alternative basis, you can also buy a whole life policy which would not only purchase that face value of the policy if you breathe your last before your children graduate from college, but would also accrue a cash value which would offer extra benefits to a rising fund in case of emergency and to your family as well. You can also think of converting a portion of term life policy to a whole life insurance with a course of time to develop a portfolio of cash for the retirement.

Now that you understood the basics of whole term life policy and term life insurance, you can actually go ahead and make a good choice to search the appropriate solution for life insurance for your family and yourself. You can search for life insurance solutions at various online term insurances as well.

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