401(k)
Calculator
Medicare
Application
Nationwide
Retirement
Solutions
Retirement
Plaques
Roth IRA
Contribution
Limits
Simple
Retirement
Calculator
Social
Security
Verification
Senior Retirement Tips :: Whole of Life Insurance
Whole of Life Insurance: Advantages of Whole Life Insurance
Custom Search
Term vs Long-Term
Term life insurance is the antithesis of whole of life insurance. Instead of purchasing life insurance designed to cover your entire life, term life insurance only covers you for a certain period of time or term.
For example, a young, working parent who maybe only wants to insure themselves until their children are 21 and can support themselves in the event of an illness or accident might opt for term life insurance as opposed to whole of life insurance.
Benefits of Whole of Life Insurance
Coverage as Long as You Keep Your Premiums Up
The biggest benefit of full life insurance is that your premiums stay the same and continue for your entire life.
On the other hand, term life insurance is renewable once the term is up and the insurance company may refuse to renew your life insurance or end up charging an exorbitant premium if you’ve had recent health problems.
For example, a young man enrolling in term life insurance at the age of 28 for a 15-year term might only pay $200 a year in premiums, but once that same man goes to renew once he’s 43, he could see those premiums jump to $2000 or even higher depending on his health.
Option to Cash in Your Life Insurance Policy
Most whole of life insurance plans offer some type of investment component that keeps the bulk of your premiums in a growing investment account designed to not only protect your family in case you die, but also serve as a nest egg for your retirement.
Many of these policies allow you to cash them in or at least a large chunk of them once your working years are over and you no longer need to insure against a potential loss of salary. On the other hand, term life insurance payments disappear into the nether.
Drawbacks of Whole of Life Insurance
Expensive Premiums
The downside of whole or full life insurance plans is that the premiums are often significantly higher than their term alternatives. Be prepared to pay an exponentially higher annual or monthly premium.
Inferior Investment Prospects
While your full life insurance premiums can be used as an investment or retirement savings tool, most personal finance experts agree that money can be better invested elsewhere.
If you have the willpower and acumen to take the money you save from buying term instead of whole insurance and invest in higher-yielding investments, you’ll save significantly more for your retirement.
When You Should Buy Term
If you only need to cover yourself for your working years (for example, a young father who wants to protect his family in case something happens during his prime working years), then whole of life insurance probably isn’t for you.
Choosing a term life insurance plan instead will save you a lot of money in the long run.
See also:
All Site Articles for Senior Retirement Tips
Custom Search
Learn great ideas about your opportunities to retire in Florida with
The Florida Retirement Book
Order Online
24 Hours a Day
7 Days a Week
365 Days a Year!
Copyright 2008
SeniorRetireTips.com :: Whole of Life Insurance