Term Life Insurance Policies Versus Whole Life Insurance Policies
Life insurance is a necessity that most people understand. But what they often dont understand is the differences between term life insurance and whole life insurance.
There are three main differences between a term life insurance policy and a whole life insurance policy.
Insurance Difference #1
Value. Whole life and term life insurance both offer coverage as long as the policy is in effect. Meaning that as long as payments are being made both policies offer a pay out in the event of the policy holder passing away. But the main difference is that the only benefit to keeping the term life policy in effect is its death benefit payout.
A whole life insurance policy also builds a cash value, which can be withdrawn by taking a loan from the insurance company.
A term life insurance policy has no cash build up value.
Insurance Difference #2
Cost. Because a whole life insurance policy has a cash value feature it is more expensive. The extra expenses go towards the investment aspect of the policy, and towards the cost of managing the funds. Traditionally insurance companies also pay out higher commissions to agents that sell whole life insurance policies.
On the other hand, a term life insurance policy only offers one benefit. And that is the pay out that the designated beneficiary receives. Because of this a term life insurance can be ten times cheaper than a whole life insurance policy.
Most people who are simply looking for life insurance coverage tend to opt for term life insurance because it is simply cheaper.
Insurance Difference #3
Medical check up requirements. Whole life insurance issuers require that applicants under go a full medical evaluation to determine their health status. This can be a time consuming and cumbersome process for some. On the other hand, there are term life insurance companies that do not require a medical check up.
Donny Lowy manages http://www.americanlifedirectonline.com an online term life insurance portal.
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