Tip & How-To about Finance

The difference between Term Life Insurance and Whole Life insurance

The main difference between Term Life Insurance and Whole life insurance lies in what happens to the money.

In Term Life Insurance, you pay the monthly or yearly fee. If you die when the policy is active and paid, then your family will be covered and receive the amount which you have insured. If you don't die before the policy expires, you (or your family) receive nothing.
The premiums are lower than Whole Life Insurance but they change as you age.

Whole Life Insurance (AKA Cash-Value Insurance) has both insurance policy and Investment account.

The premiums are higher than Term Life Insurance but they are fixed (you pay the same premium even when you age). If you die, your family receives the death benefit but you can also cash the money when you are older or retired.

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What is Term Life insurance?


Term life insurance can help protect your beneficiaries against financial loss resulting from your death; it pays the face amount of the policy, but only provides protection for a definite, but limited, amount of time. Term policies do not build cash values and the maximum term period is usually 30 years. Term policies are useful when there is a limited time needed for protection and when the dollars available for coverage are limited. The premiums for these types of policies are significantly lower than the costs for whole life. They also (initially) provide more insurance protection per dollar spent than any form of permanent policies. Unfortunately, the cost of premiums increases as the policy owner gets older and as the end of the specified term nears.
http://www.investopedia.com/university/insurance/insurance8.asp

Aug 27, 2013 | Finance

3 Answers

What types of life insurance are there?


Basically there are 5 major types which you can read more about here: http://www.investopedia.com/university/insurance/insurance8.asp

Whole Life
Universal Life
Variable Life
Variable Universal Life
Term Life

Aug 27, 2013 | Finance

3 Answers

What aspects in life does life insurance cover?


Basically it protects you and your family from financial problems that may accrue due to changes in your health or, god forbid, death.
Basically it is:
· Long-term care
· accidental death and dismemberment
· hospital indemnity

Aug 27, 2013 | Finance

2 Answers

What is the difference between term life insurance and permanent life insurance?


Term insurance provides life cover at a fixed rate of payments for a limited period of time where you can have the money after completion of the term. Permanent life insurance is life cover for entire life where the amount is given to your family on your death.

Aug 26, 2013 | Finance

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