Term Life Insurance & Different Life Insurance Covers

By: Jane Molano

People just get confused when ever the topic of life insurance starts. In many cases people just take a life insurance cover just for the hack of taking one life insurance. But have you ever thought, what are the results of taking something which is of no relevance to you? Life insurance is a cover which is designed to help your family more than you. In fact some of the policies give out benefits to your family members only after your death. So what does all this means? Actually life insurance is a cover that is given to the family member or the beneficiary mentioned at the time of taking the policy; it is designed according to the need of the insurer. Generally we have many different kind of life insurance which suits the needs of different people with different requirements. These can be classified as Term Life insurance, Whole life insurance, Universal life insurance, Variable universal life insurance and so on. Out of these four the two most common ones are Term life insurance and whole life insurance.

The difference between the two is that Term life insurance is a insurance that is for a fixed term while whole life insurance is for your whole life.

A Term life insurance as I said is for a fixed term and once taken you have to pay the premium for a fixed term and as soon as the term is over the insurance cover also gets over and you have to renew the policy. A Whole life insurance is once taken you have to pay the premium for your whole life. Both the policies are designed to take care of your funeral costs and your liabilities which are there after your death. But still there is one difference between the two. A Term life insurance is cheap that is because the money you pay towards the annual premium for the policy is not reinvested and is kept as a safe investment in the bank. While the money that you pay for Whole life insurance is reinvested by the insurance company in the market in the form of equity, mortgages, mutual funds or any other form of investment. This way the company earns some money against the premiums which is then distributed by these insurance companies to their customers in the form of dividend. This way you also earn some money which can be used to pay the annual premium again thus making it cheaper. Also since in this policy the money is invested it has a face value also, which means that you can take a loan against your insurance policy.

No matter which ever policy you take it is always better to do some research prior to taking the life insurance. Always check out which insurance policy suits you the best. If you are confused then you can always take the help of a financial advisor or an insurance broker who can guide you with the best of their knowledge, helping you to choose the best insurance policy for you.

Life Insurance
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