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Is my life insurance whole life or term?
Term is strictly protection. Whole life is protection plus cash value. Cash value is similar a to a savings account within the policy. Part of the periodic premium goes to pay… for the insurance protection, and part is applied to the accumulation of cash value. Term insurance can be purchased for a specified period to coincide with your needs (such as raising children), such as, 5, 10, 20 or 30 years. Whole life also can be purchased for a specified time, but when done so, the specified time will me stated in terms of how long it will take to pay the policy in full such than no further premiums are due. When that occurs, the policy remains in force, whereas if premiums stop with term insurance, the coverage lapses. Answer Whole life insurance is for life, or up to the age of 100! You do not need to renew it and the premiums are fixed for life. They are usually high when compared to term life insurance. This is because whole life insurance has cash value benefits as well which you can dip into. This comes in handy when you may have need of money. (MORE)
Whole life insurance is the most expensive type of life insurance. The advantages of a whole life insurance policy include guaranteed death benefits, guaranteed cash values, f…ixed annual premiums. The primary disadvantages of whole life are premium inflexibility,the internal rate of return in the policy may not be competitive with other savings alternatives, and the cash values are generally kept by the insurance company at the time of death. Term life insurance provides life insurance coverage for a specified term of years in exchange for a specified premium. The policy does not accumulate cash value. A policy holder insures his life for a specified term. If he dies before that specified term is up, his estate or named beneficiary receives a payout. If he does not die before the term is up, he receives nothing. (MORE)
It is not really a question of "better", as it is of "different". . Term insurance may be thought of as "pure protection" in the sense that it provides coverage on ones life …for a stated term. If the insured does not die while the policy is in force, it expires, and there is no accumulated value remaining. Stated otherwise, there is no element of "savings" with this kind of insurance, and therefore, it is less expensive than "whole life", all other things being equal. . Whole life provides the same type of life insurance protection, with the added element of "cash value". That is, a part of every premium dollar is applied to some sort of savings mechanism. The latter can be within the policy itself, or in an outside vehicle connected with the policy, such as a mutual fund. Because of this element, whole life is more costly than term. Yet, because of the accumulation of value, after a period of time, loans can be taken from the policy, and/or the policy can become "fully paid-up" such that no further payments need to be made. (MORE)
Term insurance is written for a specific period of time or until an age certain (the term). It may be for 1 year, 5 years, 10 years or it may be until age 60, 65, 70, etc. At …the end of the term the insurer may cancel the policy, raise the premium, reduce the benefit, or some combination of these. Some policies are guaranteed renewable by the insured but always at a higher premium or smaller benefit. Whole life insurance lasts your whole life. The monthly premiums are higher at the beginning but remain level (no increase) throughout the premium paying period. Because of the reserve which is built up inside the whole life policy the insured has more benefits such as cash value, policy loans, paid-up insurance, or extended term coverage. (MORE)