Life Insurance Policy : The Basics
At certain point of your life, people will definitely think of insurance. You may have gotten insurance coverage because your parents have bought them for you, but you want to know more or you just want to add more coverage to yourself. So the question to ask: What kind of life insurance policy should I get? What is Whole Life Insurance? What is Term Life Insurance? Which is better for me?
Well, this article will answer your basic questions.
What is Whole Life Insurance?
A whole life Insurance is essentially an insurance coverage that has cover for you if there is an accidental death or physical disabilities. There is also an additional cash value for this type of insurance. The longer you keep this insurance, the higher is the cash returns if you decided to give up the policy.
In other words, there is CASH in this type of insurance.
This is a popular for working adults who have an established career or people who are financially sound. The reason is that the whole life insurance is usually very expensive. This is due to the additional feature of cash returns in the insurance.
This is good in the viewpoint of personal finance as there is investment involved
There are people who wants just the pure insurance cover for themselves. That is where Term Life Insurance comes into play.
What is Term Life Insurance?
A term life insurance provides a much higher insurance coverage for you if there is an accidental death or physcial disabilities. It cost lesser to buy a term life insurance because there is no cash value to the policy.
To put it simple, if you give up the insurance, no cash for you upon surrender.
This type of insurance are good for people who are have little financial abilities. People who are in their 40s-50s who have not bought insurance at all should also look at this type of insurance.
So which one is good for me?
Ready for my suggestion? My suggestion is: have a mix of both. The reason is that whole life insurance generally has pays the insured lesser in events of death because part of your payment has been used to generate cash value. If you look at the rising cost of medical expenses, I do not recommend to have a lower coverage for yourself.
Term life insurance are also very cheap. It can go as low as just $10/month and you get covered for a lot of money. Yes, there is no cash value in return but the coverage is there for you at a very low cost.
Get both types and to ensure a balance in terms of cover and cash value.
That is the best of both worlds, isn’t it?