Before trying to compare the two types of life insurance which are widely available, you must first understand the basic concepts of life insurance plans in general. Life insurance provides monetary benefits to the family members or designated beneficiaries of the insured individual following his or her death.
The funds received from a life insurance payout are commonly used by beneficiaries in three ways. The first is for expenses associated with the death of the insured. Paying for costly funeral and burial services, placing obituaries in local newspapers, and arranging for transportation for family members to and from the funeral or burial site are first and foremost on the list of things to accomplish with the life insurance funds.
Secondly, more often than not, the highest level of life insurance is carried by the primary wage earner in a family, allowing the family to function following the loss of wages that result from the death of that individual. Any payout of benefits will help the family get by in the weeks and months following the loss of the primary provider for the family’s monetary needs.
Should there be additional money remaining in the life insurance benefits, spouses often pay off larger debts in order to make ongoing financial commitments more manageable with a single income. By paying off and thereby eliminating car loans, mortgage loans and other similarly large monthly bills, the surviving spouse is more likely to be able to provide for him or herself and any children the couple may have had.
The amount of the life insurance policy will of course determine how many of these tasks can be accomplished with any payout of benefits. Selecting life insurance coverage should be about providing the best possible payout for the most affordable monthly premium, and you will also need to examine the two major forms of insurance plans available. Term and whole life insurance plans have their unique advantages, and understanding the difference between the plan offerings will allow you to make an informed choice as to which best suits the needs of your family.
Whole life insurance coverage spans the course of the insured individual’s entire life, meaning that even if death does not occur until decades into the future, the insurance coverage will remain in effect, provided they keep up with monthly premium payments. Perhaps the biggest advantage of whole life insurance is that it guarantees coverage once insured. In other words, no matter how old you get or what illnesses or ailments might arise in the course of your life, you cannot lose coverage or be denied benefits as a result. Once you have been insured under the plan, your continued coverage under that plan is guaranteed as long as there is no lapse in insurance premium payments.
While the amount of whole life insurance premiums may go up as you age, the value of the plan itself increases over time as well. Many whole life insurance plans actually have a cash-out option through which the insured can access part or all of their accumulated life insurance funds prior to death.
The increased premium payments over time are the least advantageous part of whole life insurance, and term life insurance plans may be the right choice for some people as a result. Term life insurance rates do not increase over time but the plan itself only remains in effect for a specified period or term.
The term of the insurance plan is determined at the time of enrollment and may be anywhere from a few years to several decades. The insurance premiums remain fixed over time and therefore make this type of life insurance more affordable for those with a more constrictive budget.
At the expiration of the term life insurance policy timeframe, there is often no guarantee that a new policy will be issued. This is one of the most troubling details of term life insurance for most people. Should you reach an age which is considered risky to insure or have acquired chronic illnesses or diseases since the initial term life insurance plan was issued, it may be difficult to obtain new coverage.
However, the better insurance companies will guarantee reissuance of term life insurance for repeat customers. In other words, if you select a term life insurance policy, remain in good standing with premium payments, and reach the end of the policy term, a company may guarantee that a new term life insurance policy will be issued to you.
Aaron Irwin is a representative of Guardian Insurance. With Guardian, insurance cover is uncomplicated and easy to apply for. Our products are transparent, flexible and easy to understand; offering financial protection for your loved ones and peace of mind for you in a matter of minutes, over the phone.For more information about our cheap life insurance, visit us online today!
