Term Life Insurance Policies

Term life insurance is basic, textbook life insurance. When you think of a policy that lasts a certain amount of years where you pay an annual premium, you are thinking of term life insurance. Term is not the only type of life insurance you can get; you can also apply for a whole life insurance policy. The difference between term and whole life insurance basically comes down to investment.

Whole life insurance has two parts: a morality charge and an investment reserve that earns you interest. You can receive a return on your investment every year with a whole life insurance plan. Whole life insurance develops cash value that you can use to borrow against. The morality charge works like a normal term life insurance policy. Whole life insurance policies tend to be very expensive.

Term Life Insurance

Having the option to purchase term life insurance can be very important should health problems start to arise. With a term life insurance policy you can have it set up so it stops after 10 to 20 years after which the policy is over. If you were to pass on during the set amount of years on the policy then you will receive the funds, however if you should live past the policy then you will not receive the funds. With term life insurance you also have the option for your premium to increase every year or you can have it set to a fixed amount. With an option like this it allows you to have more financial backing should your family need it. Term life insurance may be the best option for insurance in a case of short-term funding.

Level Term vs Annual Renewable

Term life insurance comes in two forms: level term and annual renewable. The premium of a level term insurance policy will remain a constant throughout the life of your policy. Where as an annual renewable premium will change each year. Level term insurance policies are usually more expensive in the beginning but less expensive in the end as opposed to annual renewable term life insurance policies.

It is most likely more beneficial to you to buy a term life insurance policies. Mainly this is because whole life insurance policies can be extremely expensive. The premiums can be much lower. Wealthier people can use whole life insurance policies to help with estate planning after their death and some other people can benefit by a whole life insurance policy, but term life insurance is more common and makes more sense to the average person. Whole life insurance policies usually never make a reasonable return if held for less then 20 years, so whole life insurance policies tend to be very long. In today’s life insurance world the best deals usually are found with level term insurance policies that are 10 years or longer.


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