What Type of Life Insurance Should You Get - Whole Or Term?

Are you thinking about getting life insurance, but you don't know what type would be the best for you? Then you need to know what the difference is between the different policies. The policies you want to know about are term life insurance and whole life insurance. Knowing what the differences are will help you decide on the best policy for you.
The number one difference between these two types of policies are how long they provide you coverage. In other words, the term insurance will only cover you for a certain number of years, and the whole life policy will provide you coverage for your whole life. If you only need insurance for a specific time frame, then the term policy would be the best for you. If you want to have coverage until you're 100 or 120 years old, then you will definitely want to get the whole insurance.
Another difference that you want to be aware of is that the whole life policy will offer a tax-deferred accumulating cash value. This is an investment component for your policy. This is one big reason that some people choose to get this insurance policy, instead of the term insurance. Being able to invest is a big advantage to the whole insurance.
The third and most obvious difference between the two policies is the price. The term policy will be cheaper than the whole life policy because the coverage is different for each one. The whole life insurance policy will sometimes offer fixed annual premiums, so you won't have to worry about increasing rates if something happens to your health and it starts to go down-hill.
So, you want to make sure that you take these differences into consideration when deciding whether you want the term life policy or the whole life. Life insurance is a good idea for anyone to have, but you want to make sure you are purchasing the right policy for you. Don't rush your decision because if you do then you will end up paying a higher premium than you need to. Plus, you may end up with a policy that is not right for your needs. So, always be smart and take your time to find the right policy for you.

Credit By W A Henderson

Life Insurance

Taking out life insurance is really protecting other people, like your partner, spouse or children if you should die. The concept is simple - you take out an insurance policy and pay in while you are alive. When you die, the people you name on the policy receive the cash.
Having insurance means that you have taken on your responsibilities for your loved ones and in the event of your unexpected death, they have cash in the bank to settle the mortgage and pay the bills.
Types of life insurance
Insurance generally comes in three basic types:
· Term life
Cheap and cheerful, term life pays out if the policyholder dies while the policy is in force. The term is generally five to 30 years. If you don't die within the term of the policy, you lose all the money you have paid in.
· Whole life
Whole life guarantees a pay out because the term ends when the policyholder dies. As the insurer knows you will die eventually, the premiums are generally more expensive than term life.
· Mortgage insurance
Mortgage insurance is a type of term life. The policy lasts the life of your mortgage and the sum assured - the cash paid out by the insurer - reduces, as the amount owed on the mortgage decreases.
The theory is that if partners or spouses have mortgage life cover on a 'joint life, first death' basis, the policy pays out and clears the mortgage when the first person dies.
How much life cover do you need?
That depends on you and your personal circumstances. Certainly the cover should pay off the mortgage and provide a further lump sum to enable your family to maintain their lifestyle.
A good idea is to list all your debts - like the mortgage, car loans, credit cards, overdrafts and so on. The pay out should at least cover these.
Financial advisors often suggest insurance cover of at least 10 times the policyholder's annual salary.
Why do I need the cover?
Besides making sure your mortgage is paid off, insurance can also provide funds for putting children through university and investments.
Mixing protection and investment is not a good idea.
The lessons of the credit crunch show that savings can suffer greatly from fluctuations in the economy and if your financial planning to pay off essential debts is based on risky investments, your loved ones may not end up with the resources you have planned for them.
Separate your protection from your investments and make protection your priority.
Add ons
Life insurance can come with lots of added extras, like critical illness cover that pays out if you have certain serious medical conditions.
You should look carefully at the add ons and whether you actually need them, as each add on can increase the premium and might end up as a benefit you may never collect.
Comparison
Make sure you compare like with like with life insurance policies - one product may seem a good deal but may not offer the same cover and benefits as another that is only slightly more expensive.

 Credit By David H Thomson

Types of Life Insurance - Part 1

Today, there are many types of life insurance policies to meet a variety of insurance needs and many investment objectives. As only one element in the estate plan, the insurance program must be tailored to the needs of each individual estate. Basically, however, you will have a choice among several principal types.
Term Insurance
The chief thing to keep in mind about term insurance is that it is temporary insurance, which exists for a given period of time-such as five, ten, twenty, in some cases thirty years. You pay a fixed amount in premiums for the period of its term. If you don't die in that period, the policy expires and protection ends. Most term policies, however, give the holder an option to renew. On each renewal, the premium rises, and usually the renewal option ceases at age 65 or 70. Term can usually be converted, however, at any time to permanent insurance with no physical examination required, generally up to age 65.
Term insurance requires the smallest outlay of cash. A man, age 35, could carry $100,000 of five-year term at a net premium of only $300 per year. He'd have to pay a net of $1,148 for the same amount of whole life insurance.
But in the long run, term is not inexpensive. It's costly. The premium keeps rising with every renewal. Over a period of years, your total net costs for term will exceed the total net cost (your net premium less cash value) of permanent insurance.
Remember, too, that since most term policies cut off at age 70 or 80, they cannot give either continuous or permanent coverage to a person with a normal life expectancy. Should you buy term or not?
If you are a young person, married, and about to buy basic insurance, term insurance is not the long-term answer. You need permanent coverage until you die, at the lowest net cost. Why? Well, take the case of Mrs. Widow, age 78, at the other end of life. Her husband had carried twenty-year level-premium term life insurance for $500,000. He died fifteen years after it had passed its twenty-year mark. It was too expensive to renew, and after all, they had bought it to cover the family's needs until the children were through school. Unfortunately, retirement savings were inadequate, and Mrs. Widow has had to sell their home, hoping she can manage to live off the net sale proceeds until she dies.
But what do you do if you can't afford the premiums for permanent insurance? The best solution is to buy part term and part permanent, converting your term to permanent as your income rises. In other words, it's better to supplement permanent insurance with term than to carry no permanent insurance at all. There are also policies that blend term insurance with whole life. Over time, dividends replace the term insurance with whole life.
There are many situations, however, when term insurance is a useful solution. It's usually the best answer when there is a need for immediate protection for a limited period of time or for a particular purpose. This is the case with term mortgage insurance, which Mr. C bought to make sure his wife would never have to sacrifice their dream house.
So, too, with many business and investment situations. Take the case of an inventor seeking financial backing. He has a new product with great potential, but it will take several years to get it ready for the market. Investors, while interested, are cautious about advancing money. What will happen if the inventor dies before the product is ready? The solution: They take out term insurance on the inventor's life and thus protect themselves against the loss of their investment, at the lowest cash outlay, in the event of his premature death.

Credit  By Nate Perrott