Term Life Insurance vs Whole Life Insurance

Term life insurance as the name implies, provide cover for a specific time i.e. the term. Generally, term life insurance provides cover for a limited time and it does not have any cash returns. The debate whether term life or whole life insurance is better never ends.

Most people would say financial planners normally recommend whole life insurance because they get higher commission. While this is true to a certain degree, many financial planners do not just take cost into consideration alone. They consider your total needs as a whole. Even though you want to save money here, think carefully before you buy.

The main advantage of term life insurance is clear; they cost less, especially for shorter time period. However the disadvantage may not be apparent to you now. Why? Today, life expectancy is much longer.

As you grow older and your health deteriorates, you will have to pay higher premium than when you were younger. That is, if you still can qualify. In the event no insurance company wants you, then you will have to fund final expenses and estate taxes out of your estate!

Term life insurance will lapse immediately after the grace period, if you forgot to pay. This leaves you with no coverage probably when you might need it. With permanent life, the money built up in your policy can help pay for premiums if you do forget.

Both types of insurance have their place. A good financial planner will factor in your existing insurance policies, your age, the purpose of buying more insurance and others before making a recommendation. Whatever your choice is, term life insurance or whole life insurance, choose carefully.