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When Should You Choose Term Insurance Instead of Whole Life Insurance?
"Different strokes for different folks."
When it comes to life insurance, it's important that you keep
that saying in mind.
Most people are familiar with "whole" life insurance. This is
the kind of insurance where you will get back a certain amount
of money when it "matures" at the end of the insured period.
What you may not know is that there is another form of life
insurance called "term" life insurance.
Similar to whole life insurance, when you get a term life
policy, you pay a sum of money (the "premium") to the insurance
company, and in exchange the company promises to pay out a
certain amount of money should you die during the period for
which you are covered under the policy.
In other words, you are buying insurance coverage for a certain
period of time.
But unlike whole life insurance, you will not get back any money
at the end of the insured period when you buy term insurance.
You may be saying to yourself, "But won't I be throwing money
down the drain? After all, I won't get back a single penny after
the insured period!"
Hey, I understand how you feel. But rest assured that term
insurance is still a very idea, and I highly recommend that you
use it to your advantage.
So, why should you still consider term insurance?
Well, one advantage of term insurance is that it's cheap. In
fact, for the same amount of insurance coverage, the premium for
a term policy is only a small fraction of the whole life
policy's premium.
And this is why term policies are a great way for you to make
sure you are sufficiently covered. If you've never checked out
the premiums of a term life insurance, I highly suggest that you
go do it soon. You'll be surprised at how cheap it is to bump up
the insurance coverage for yourself!
Plus, you can use the money you save from the lower premiums to
invest in some other areas that can potentially generate higher
returns for you. This strategy is generally known as "buy term
and invest the difference", and it's something I recommend that
you take into consideration as you do your financial planning.
Copyright 2006 Ethan Lewis
About the author:
Ethan Lewis is the owner of the "Cheap Term Life Insurance"
site. Find cheap term life insurance and all sorts of other
relevant tips and advice at...
http://www.cheap-termlifeinsurance.com
Written by: Ethan Lewis
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