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| *Ostroff, Fair and Company>>>Insurance |
What is the difference between a whole life and a 10 or 20 year term life insurance policy? |
And what company has the best price available? Whole life: You pay a fix premium for life or until you hit age 100. They contain cash value in them, so expect to pay lots of premiums for little coverage. If you wish to use the cash value, you have to borrow it and you will owe interests on them. If you were to die, you lose all cash value! 10 year term are very cheap, but becomes expensive each time you renew it. Many life insurance agents will sell this to you at first and then have you convert it to whole life later on to try to trick you that term insurance sucks. 20 year term are also cheap and maybe an adequate coverage amount for most families. In 20 years, you might not need life insurance because you may have no financial obligations (such as kids or mortgage or loans). But if you do expect to have financial obligations in 20 years, then I would consider getting a 30 year term. I personally own a 30 year term insurance with $250,000 coverage. I only pay about $780/year for it and I bought it when I was 24 years old. My dad had a whole life policy of $100,000 and he paid about $2400/year at age 30. He got rid of it and replaced it with a 20 year term when he was 54 years old. He currently pays about $900/year for it. As you can see, whole life policies are very expensive. While I have term insurance, I also invest my money in a Roth IRA account. If I were to die during the term, my beneficiaries will get the death benefit and all my investments. If I outlive the term, I have an option of renewing, lowering the coverage, or cancel it. Since its only 29 years away, I expect my Roth IRA to be worth at least $1 million if I continue to invest $200/month. I don't expect to have much financial obligations to pay (maybe just a mortgage). Source(s): http://obe231.blogspot.com A whole life policy carries a premium that never changes after the policy is issued. It has a "savings" feature - your policy builds cash value over the years - sometimes to the point that you no longer have to keep paying premiums - the cash value is enough to cover them. This policy is useful in that it doesn't expire at the end of a fixed term, forcing you to look for another policy when you're older and possibly have developed health problems. The problem with whole life is that it is expensive for the amount of coverage you can get. Term life is pure insurance. A ten year term means your premiums are fixed for that term - the same for a 20 year term. This is much less expensive - a forty year old non-smoker can get $500,000 coverage for about $350 a year. The premium is determined by age and health. The problem with a term life policy is that you need to buy another policy at the end of the term. And since premiums are determined by age and health, you will pay a lot more. http://www.credit-yourself.com/life-insu... Whole Life - you pay for life. 10, 20 year term - pay for a specific number of years. Term policies tend to be lower priced than anything out there. When purchasing a Term policy, make sure it's a level one. Level means that your payments will be the same during the lifetime of the term. As for prices, just google life insurance. Former Insurance Agent A whole life policy is a policy that you have for at least til age 65 or so. It depends on the stipulation of your policy. Also, because you have cash value in your policy, you can borrow against it. Of course, you can only borrow up to about 50% of what you put in, and not 50% of the amount of the policy itself. Term life insurance is just that. It is good for a term of 10 or 20 years depending on the policy you have chosen. You cannot borrow against a term life policy. A longer term allows you to hold a fixed amount that you have to pay as a premium. If you choose a 10 year term policy, and you complete ten years but want to renew... the policy renewal may require you to undergo a physical at your expense depending on your age and the regulations of the policy. As for what company has the best price, do a little research in nationwide named companies. The company must not make more than the policy amount over the course of your payments. It is against the law. |
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