dcsimg

Why Switch to Whole Life Insurance?

By Compuquotes Team on May 8th, 2008

Whole life insurance, like term life, pays out after the death of the person who is insured. These two types of insurance are, however, very different in several respects. Term life is typically much less expensive, due to the fact that its protection is only temporary. Whole life, on the other hand, has much higher premiums but provides protection for your entire life. Given the extra expense of whole life insurance, doesn't it make sense to just buy a series of term policies instead of buying a whole life policy?

The answer, in fact, is no. If you plan on being insured for your entire life, you're much better off investing in a whole life policy, for a number of reasons.

  • Whole Life Insures your Whole Life

The biggest advantage is simply that with one policy, you're covered for life as long as you stay up-to-date with premium payments. Your policy never has to be renewed. In addition, while you pay more for whole life than for term life, your premium is going to stay constant over your entire life. That makes it an expense that's much easier to budge for over the course of your life.

On the other hand, if you buy a series of term policies, your premiums are going to increase each time you buy a new policy, due to your increased age and (possible) poorer health.

  • Whole Life Policies have Cash Value

Your whole life policy has cash value, which you can access any time you wish. This amounts to a cash loan that you don't need to jump through hoops to qualify for, with the added bonus of a lower interest rate compared to a normal loan.

  • Dividends

Another advantage is that whole life policies are investment-based. This means part of the money you pay goes towards guaranteeing the eventual claim and pay-out, and the remainder is invested. Some policies actually pay some of the investment dividends back to their customers, according to the amount of profit the company makes for each fiscal year.

  • Premium Cessation

One great benefit of some policies is the cessation of premium payments once you reach a certain age. Assuming you've stayed up-to-date with payments throughout your life, these policies allow you to remain covered for the remainder, without having to pay any further premiums. This is an excellent option, as retirement is usually an age where income is reduced, and one less expense to meet can make a big difference.

  • Term Life does have its Uses

All of this doesn't mean term life is useless-far from it. It just means you have to know which is most appropriate for your situation and state of life. Term insurance is generally best suited to cover temporary situations. For example, young newlyweds who plan to wait five years or so before having children will find that term life provides them with temporary low-cost protection, and they'll still be young enough after that time to be eligible for fairly low-cost whole life insurance.

Get Free Life Insurance Quotes
Enter Zip code :
Featured Insurance Quote
Twitter
Facebook 470 flares Google+
470 flares ×