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[W738]Whole Or Term Life Insurance

by Donald Lusan, Don

Did you know that whole life insurance or some variation thereof is bought more than another types in the United States? Why do you think this is so? Is it because the people know nothing about term insurance? Not so! Term insurance is simple to understand. You own $1,000,000 of term life insurance for a specific period of time and you die within that period the life insurance company pays $1,000,000, as long as you keep paying the premiums. Everyone knows about term life insurance.

Permanent life insurance is a different matter. There is much more to absorb when it comes to a permanent policy. You can consider the whole life insurance policy which is really a policy which lasts for the rest of your life, even if you live to age 100. The premium payments can be level for the entire period or, as with some modified whole life policies, you start out with a lower premium and it increases every year for 5 or 10 years then it levels off.

On the other hand you can contract with the life insurance company to pay only for a specific period of years, 10 years or 20 years for example, and the policy will remain in force for the rest of your life. You can also arrange with the company to pay one lump sum and you have your single premium whole life insurance policy for the rest of your life.

Even the the variable life insurance policy is whole life based thus it is considered permanent life insurance. Variable life insurance is a whole life policy with an investment portfolio attached.

These are the basic variations of whole life insurance. Each life insurance company has a different slant to their modified whole life policies, however.

Whole life insurance policies have guaranteed cash values which you may use as you see fit. You may use these values as collateral if you want to get a loan from a bank or other financial organization. On the other hand you may choose to borrow the money from the policy itself. The interest rate is usually lower and you are never under pressure to repay within a given period of time. Any outstanding balance, however, will be deducted from the face amount upon your death.

Whole life insurance policies also earn dividends if your life insurance company is effective with their investments and also if they keep expenses down. Dividends are not guaranteed. These dividends are applied according to your wishes.

The dividends earned on your whole life policy can be used to reduce premiums, can be paid to you in cash each year, can be left with the life insurance company to accumulate interest or they can be used to purchase paid up additions. Paid up additions are tiny single premium whole life insurance policies which increase the amount paid at death. They also have cash values which accumulate interest and they earn dividends as well.

Permanent life insurance policies are very effective, yet complex, tools. If you take the time to understand them you will more appreciate why more people buy them than term insurance. Whole life insurance can be kept for the rest of your life.

Whole Life insurance is a type of policy that is designed to provide you with protection for as long as you live or your "whole" life. You can buy any amount of Whole Life insurance that you want to and designate anyone that you choose as your beneficiary. The beneficiary is the person that the sum of money is paid to in the event of your death. You are the "insured".

Whole Life insurance isn't nearly as popular as it once was. This is because there has been a new type of insurance available for quite awhile now called Term Life, that is less expensive than Whole Life is, but provides just as much protection.

The main difference here is that a Whole Life policy takes a portion of what you pay into it and places it into an interest bearing savings account. You can borrow against this account later as it grows into a tidy sum. The issue that many people have as that they would rather just buy "pure" insurance coverage, such as Term Life, and invest their money elsewhere. This makes complete sense because there are likely to be many places where you could get a better return on your money than having it invested in an insurance account.

Also, a person really doesn't need an insurance policy for their whole life, if you think about it. Once your kids are through college, your home is paid for and you have no other major expenses, why do you need to continue to buy life insurance? Burial insurance, yes, but other than making sure you are going into the next life without leaving a burden on someone it doesn't make a lot of sense, unless, of course, you don't have a solid retirement plan in place that will provide for your spouse or significant other. In this case you would want to have life insurance protection in place.

Article Source : Pg. 116

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Both Donald Lusan & Guitarjoe are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Donald Lusan has sinced written about articles on various topics from Finances, insurance agents and Finances. For more than 40 years Donald has been known for his extensive knowledge of the life insurance business. He has represented some of the largest and most admired life insurance companies in the United States as well as Canada. His advice is invaluable. Don. Donald Lusan's top article generates over 40500 views. to your Favourites.

Guitarjoe has sinced written about articles on various topics from Health Insurance, Affiliate Programs and Dental Practice. Stop! Learn More About Cheap Life Insurance Options And Even Get Free Term Life Insurance Quotes Right Now At or by clicking on. Guitarjoe's top article generates over 18100 views. to your Favourites.