Posted on November 13, 2012 by Dr. Taffy
You’ve heard the term life insurance, yet you don’t know which is the best whole life or term insurance. You’ve come to the right place because as you prepare for marriage, you need to be thinking long term.
What is Whole Life Insurance? Whole life insurance is also known as “cash-value” insurance which is a basic and consistent type of permanent life insurance. It remains in effect your entire life at a specific level premium. Is this a good choice? Sure if you don’t expect your life insurance needs to diminish over time. There’s a portion of your premium that will go into a reserve fund called “cash value” that adds up over the years your policy remains in affect. The reserve fund is tax-deferred which allows you to borrow against it until you withdraw it.
Under whole life insurance, the premiums generally remain constant over the life of the policy and you must pay according to the amount indicated on the policy as well as how often.
A whole life insurance policy will reflect what is happening with the economy. There may be times when you lose money, and other times when you makes money. Now let’s talk about Term Life Insurance for a minute. Tip: This will be a two parter.
Term Life Insurance a no frills type of insurance. It’s for a specified duration limit or time. Individuals can purchase a specific amount of coverage for a specific time period by signing a contract. They will pay for the coverage period and at the end of the term the policy expires.
Note that term life insurance is the least expensive available insurance policy and allows you to spend less. This may be more appealing especially if you are dealing with a lot of wedding expenses upon your return. A down side to make a note of: It does not build up cash value and the premium normally increases as the policy owner gets older.
If you die while the policy is active; term life provides a stated benefit for it and your survivors will be paid the agreed upon amount. Yet the policy does not provide any return beyond the stated benefit and once the policy expires; the insurance coverage stops and the insurance company keep the money.
Be sure to do your homework and choose which works best for you and your family.