Life Insurance Policy - What Is The Difference Between Term And Whole Life Insurance
Dean Shainin

Even though there are many different forms of life insurance policies, essentially all life insurance policies are either term insurance or whole life insurance, or a combination of the two.

There is also universal life insurance that you can adjust the premium and the policy to the amount you think you need.

Variable life insurance is an option for someone who wants to have control of the financial and investing aspect of their insurance policy.

What Is A Term Life Insurance Policy?

A term life insurance policy provides pure insurance protection for a specific period of time, such as five years, ten, or 20 years. At the end of the term period, the policy expires with no accumulated cash value, and no benefits are payable. The death benefit is only paid if you die during the term period. Some define a term insurance policy as “insurance that is actuarially designed to expire before you do.”

The premiums on term insurance are generally low, but increase substantially as your age increases. For this reason , a term life insurance policy is the most economical when purchased at a younger age and when the term is longer. Short term renewable policies would initially be less expensive, but after middle age the renewal premiums begin to jump dramatically.

For example, in an annual renewable term insurance policy with a $100,000 death benefit, the annual premiums might look something like this. Remember these are just examples to show the difference of cost with age.

  $150 / year age 35

  $450 / year age 50

  $1,800 / year age 65

What Is A Whole Life Insurance Policy?

Whole life insurance is the most common form of life insurance sold. These type of policies remain in force until you either die or reach age 100, as long as you pay the premium as scheduled. Also known as ordinary life, or permanent insurance, a whole life insurance policy is characterized by level premiums, level face amounts, guaranteed values, and a relatively high degree of safety.

Whole life insurance builds a living benefit through its guaranteed cash value, enabling the policy owner to access this cash for emergencies, as a supplemental source of retirement income and for other needs.

A whole life insurance policy will include both insurance and a savings aspect. They are often used for long term financial planning. Many people like the level premiums associated with whole life insurance, since you always know what the cost of insurance will be and never need to be concerned about your monthly premiums going up.

The risk factor of a whole life insurance policy and company is much different than it is for something like an auto policy. When an insurance company issues an auto policy, it hopes that the policy holder will be a safe driver and will never be in an accident. When an insurance company issues a whole life insurance policy, it knows it will someday be called upon to pay the claim.

With online Internet access you can easily shop around and compare the many different companies and policies. Take time to get several life insurance quotes and check to see how they are rated with the BBB. It’s important to look into the financial standings of the insurance companies you are considering before you sign up for any type of life insurance policy.

Dean Shainin is a well known writer, developer and internet marketing expert of http://www.MyWisdomBase.com a directory designed to provide current information, resources, tips, services and products.