Term Insurance Versus Whole Life Insurance: It Depends On Your Needs

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Sometimes it is difficult to think about death

. But given its inevitability, it is something that we should prepare for. When we die what will befall our family, more so if we have kids who are incapable of supporting themselves? It is our responsibility as a parent to ensure that we are not a burden to our family and that they have some means of support in the event of our demise.

Life Insurance: An Option

Wouldnt it be great if there is a way of providing support for our loved ones even when we are no longer around? Although it will not replace our physical presence, at lease it will alleviate some of their problems.

Life insurance provides us with this peace of mind. By purchasing life insurance with our family as beneficiary, we are somehow assured that they have some form of financial support after our death. And hopefully this will be adequate for them to continue with their lives normally even in our absence.

Life Insurance in Simple Terms

Simply put, a life insurance is an arrangement between a policy holder and an insurance provider wherein the former pays a certain amount on a regular basis (premium) in exchange for a larger sum upon death (death benefit). The insured may be the policy holder himself or another party. The death benefit is given to a designated beneficiary, who is oftentimes a member of the family.

Categories of Life Insurance

Through the years, life insurance has evolved. Various packages are available and these are meant to cater to the different needs of the consumers. At the same time, this has made choosing life insurance more difficult. There are two general categories and these are:

1. Life insurance policies for protection. Simple life insurance policies fall under this group. You pay small amounts over a period of time and your beneficiary is benefited by a large amount in the event of your death. Term insurance falls under this category.

2. Life insurance policies for investment. These are the ones with cash values the type that you can borrow against. There are several ramifications of life insurance policies under this category, but aside from providing insurance protection, it has the added goal of facilitating the growth of capital. For this reason, it is also a financial investment alternative. Whole life insurance is included in this category.

Choosing Between Insurance Categories

Choosing a suitable insurance policy depends on ones intention. Are you simply after protection or do you want protection plus investment? Basically it boils down to term vs whole life insurance. Both have their pros and cons, but your decision will be based on your objective as well as your present financial status. If you are simply after financial security for your family then term insurance may be sufficient. More often than not, it will satisfy your need for peace of mind.

At the same time, it affords the cheapest packages. But if you have excess cash to invest, it may be worthwhile considering whole life insurance and its different variations. Then again, your specific needs, preferences, and financial capability will dictate your final choice.

Choosing the Right Insurance Provider

Deciding on the type of insurance to purchase is one thing; choosing the right insurance provider is another. Since this is a long-term agreement, the long-term stability and viability of the chosen insurance company is important. If the company folds up in ten or twenty years and you have not made your claim, the whole exercise becomes moot.

For absolute peace of mind, you should purchase insurance (regardless of type) from a reputable company like American General Life Insurance Company. In so doing, you are somehow assured that your loved ones will receive what is due them when the time comes.

by: Elissa Joyce

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