When it comes to purchasing an insurance, most policy buyers are
unsure whether they should purchase a term insurance or a whole life insurance.
If you belong to this group of confused buyers, then keep reading.
To help you make a well thought decision, let us begin with getting
a better understanding of what each type of insurance means.
Term Insurance
The name term insurance itself suggests that this kind of insurance
is only valid for a specific period. A term insurance offers death benefit to
the nominee of the deceased insurance holder, however, if the insurance holder
survives the insured period then he receives no maturity benefit. Term
insurance also has lower premiums as opposed to its counterpart, however the
premium amount keeps increasing with time.
Whole Life Insurance
Whole life insurance is also known as permanent life insurance, and
this kind of insurance comes with death benefit along with an income benefit.
Here the tax exempted cash accumulated over time can be used by the policy
holder as he deems fit, or even saved for retirement. However, as opposed to
term insurance the premium amount in whole life insurance is much higher, but
it does remain fixed throughout.
Now that we know what each insurance means, let’s find out which one
is more suitable for you.
Which insurance should you buy can be answered by considering
factors such as your age, purpose of buying the insurance etc. For someone in
their 20s it makes sense to opt for a term insurance policy which can later be
converted into a whole life insurance, by doing so one can reap the benefit of
low premiums early on in life. However, someone in their 40s should consider
purchasing a whole life insurance policy to help secure the future of your
dependents as well as give you a cushion for retirement.
Consider these factors before making your decision and set out to
understand both types of insurance completely before purchasing your policy.
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