Making sure you have the right life insurance contract for your particular situation can be quite hard. The reason for this is you first have to take into account your own personal circumstances and second how these will in turn influence the particular choice of plan you make. There may be some people that will benefit from life insurance for the whole of their lives and others that may just require cover for a set period of time. This page will hopefully indicate the differences between term insurance and whole of life cover and in turn give you an idea as to which one might be suitable for you.



The primary difference between term and whole life insurance is simple: term insurance offers only life coverage. A term policy does not build a cash value over time. When the person (or persons) covered by the term policy pass away, the death benefit of the policy is paid to a beneficiary.

Whole life insurance works differently. Whole life combines the life coverage and death benefit of term insurance but also provides a vehicle for investing. Over the years the whole life policy is held the investment builds a cash value. The decision regarding which policy is better requires taking a closer look at each type of insurance and the needs of the person seeking coverage.

It should be noted that whole of life insurance is generally more expensive that standard term, insurance. Owing to the fact that it will run for the life assured's whole life and the fact that the plan carries an investment element. In contrast term assurance which runs for a specified term and also has no investment element is proportionately cheaper.

Many people prefer term insurance because of the low premiums. They only need a simple policy that pays a death benefit if they pass away. Further, many believe that investing the amount of money saved through lower premiums, they can outperform any investment vehicle offered by a whole life policy.

It has to be said that most financial advisors still recommend whole of life insurance more that level term owing to the fact that they understand establishing a cash value in the plan and the resulting higher premiums is more a benefit to clients than a detriment.

If a wealthy person is creating a complicated estate plan to shield various assets, there may be a need for a whole life policy that builds a cash value over time. Often, people who own and operate businesses need additional coverage to protect their families, their assets and themselves.

That said if a parent just wants to protect their family in the event of death the likes of a term insurance contract, with its low premiums, could be the most effective solution available. The reduced premiums against the whole of life are generally easier to afford. In addition if they are looking for an additional investment element there are plenty of monthly savings plans available that could also appear to be far more effective.

In summary the right type of insurance for you is very much dictated by your own personal needs and circumstances and those of your family and dependents. Whole life cover is a great solution for some but level term can be a lot better for others. Making the appropriate choice needs a lot of consideration especially taking your own circumstances into play.