If you are thinking about getting life insurance, getting an overview of the different kinds should help. This article will talk briefly about the difference between whole life insurance and term life insurance, as well as some different kinds of whole life insurance.
The easiest way to tell the difference between whole life insurance and term life insurance is to look at what their names mean. When you buy whole life insurance, you are covered for your "whole" life. As long as you own the policy, it will pay a benefit when you die as long as you own it. What that benefit is depends on how much the policy is worth when you die, but you still own it even if you stop paying for it. Whole life insurance also builds up cash value without having to pay taxes on it. Whole life can also pay dividends over the course of the policy's life.
On the other hand, term life insurance is bought for a set amount of time. If you die during that time, your beneficiaries will get the agreed-upon amount from your term life insurance. If you stop making payments or die after the term is over, it won't pay out. Also, term life insurance doesn't build up any cash value.
There are two other things that should be said about whole life insurance vs. term life insurance. The first thing to know about whole life insurance is that the premiums are higher at first but stay the same as time goes on. On the other hand, premiums for term life insurance are lower at the beginning of the policy and rise over time. The cash value of a whole life insurance policy is also something you can use to get a loan. Term life insurance can't do this because it doesn't have a cash value. There are two different kinds of whole life insurance to talk about. The first is universal life insurance, which is a type of whole life insurance that gives you more freedom. With universal life insurance, you can change the amount of your premiums and the amount of your benefit over time to fit your budget. This is possible because the premiums go into a fund that grows based on the rate of interest. This type of whole life insurance, like regular whole life insurance, has a cash value that can be used to borrow money.
Variable life insurance is the second type of insurance that is not the same as whole life insurance. This type is similar to universal life insurance, but the premiums in the fund are tied to the financial markets instead of interest rates. Even though this type of insurance has a bigger chance of making money, it also has a bigger chance of losing money.
As you can see, if you are thinking about buying a life insurance policy, you have a few options. Now is a good time to use some of the other tools on this site to help you decide what kind of life insurance policy you and your family need.
