The insurance sector is quite confusing. People get confused among term life insurance and whole life insurance. Therefore, it is very difficult for them to find out the right information about these different insurance policies and therefore they get confused while picking out the best insurance policy for themselves and their loved ones. If you are confused about which life insurance plan you need to pick out, then you can read along to pick out the best plan for you.
Understanding the difference
People get confused that whether they need to purchase a life insurance or term life insurance. Though this is entirely a personal decision make sure that you take it in such a way that all financial needs of your nominees’ beneficiaries are fulfilled. Life insurance is quite flexible as well as a powerful financial instrument that fulfils all your financial objectives. It extends from rendering financial security to constructing financial assets or even constructing money for your upcoming generation.
Let’s discuss the main features of whole and term insurance.
When choosing between term life or whole life insurance plan, there are several variables that you need to consider. Of course, there are knowledgeable agents that can help you to pick out the best choice as per your circumstances and find out whether term life or whole life which one is the best option for an individual.
Following are the factors that one needs to consider:
- Current age of the individual
- Present health conditions
- Financial requirements of one’s family
- Funeral and death expenditure
- Your children’s age
- Health expenditures that extend for long-term in case of any serious illness
- Current debts and mortgage
- Your retirement age and the plan of your retirement
- Tuition fees for your child’s higher education
- Your requirement for an extra savings plan for your retirement
- Your intent to assign a trust as one of the parts of your will
- Your wish to donate the proceeds of your life insurance to a charity
- Your opinion on paying for a term policy and not receiving any benefits.
Let us suppose that you are 35 years of age and your children are quite young. On top of this, you are the only breadwinner in your family; you must consider purchasing a term life policy that will provide you with a comprehensive coverage of the financial obligations of your family.
In order to get to know the face value of your family, you need to add the expenses of your living, home mortgage, debt clearance along with your kid’s education fees. This will help you to find out your needs in case of your premature death. The policy term depends majorly on the age of your kids and when they will be completing their college.
One option for you is to buy a whole life policy that not only pays for your children’s college education in case you pass away prematurely before they go to college but also ensures a cash value that renders extra benefits to your family or a growing fund of emergency money. Plus, you also have an option is to convert some parts of your term policy into whole life insurance so as to convert it into a cash portfolio for your retirement period.