What is the diffent between term life insurance and whole life insurance? Which is most choosen?

Answer 1

Whole life insurance is the type of plan that contains savings in it. The savings is technically called cash value. Cash value grows tax-deferred. If you ever want to take money out of it, you have to borrow it and owe monthly interest on it. If you surrender the policy, surrender charges may apply and possibly income taxes. If you die while the policy is still enforced, you will lose all cash value. Death benefit will be reduced by any missed premiums and any loans taken out of the cash value. As it says, whole life is where you pay premiums for life.

Term insurance is just regular life insurance without the savings. Since it does not contain any savings, term insurance is said to be inexpensive. You can buy lots of coverage for low amount of premiums. Since it is inexpensive, most people are able to save their money in a savings vehicle, such as bank accounts, mutual funds, stocks, bonds, and retirement accounts. If you outlive the term, most people usually reduce their coverage or they don't need it anymore since they been investing since the time they got term insurance. Term insurance is only effective if you invest the difference.

To see a hypothetical cost between whole life and term insurance, go here: http://obe231.blogspot.com/2006/11/comparing-whole-life-with-term.html

Insurance agents will say that term insurance rarely pays out. I don't know where they get their facts from. There's a good chance they never sold term policies or they believe in what their company says. Nobody knows when a person will die. My company paid out over $825 million in death claims last year from term insurance. Over the 30 year period, the company has paid out over $10 billion in death claims. The company currently has over 100 million clients that has term insurance and continues to grow.

Insurance agents will also say that term insurance gets expensive when you renew it. Yes that maybe true, but which would you prefer? Paying $2000/year for whole life now or just $500/year on a 30 year term?

What is most choosen? Most people don't know the different types of life insurance and don't really understand it. So they will buy whatever the agents tell them to buy, which is usually whole life or some sort of cash value life policy. Cash value life policies pays out huge commissions, while term policies don't. If you were a life insurance agent, which would you prefer to sell?

Personally, I own a 30 year term insurance and also invest $100/month into my Roth IRA. I bet most life insurance agents own term insurance as well or they don't own any at all. I never seen a life insurance agent owning a cash value life policy, well at least not yet anyway. Hmm, maybe you should ask your life insurance agent what he/she owns?

Answer 2

Whole life is bought and paid for. It will cover you forever (unless you cancel it). You will also pay for it until you die.

Term life is more of an accidental death insurance. You buy and pay for it more like a lease. You can get 10, 20, 30 year policies, etc. The advantage of this is that it is much cheaper and usually doesn't have the same qualification requirements as whole. The disadvantage of course is that you don't get a cent if you don't die in the specified time frame, you'll end up paying into it all those years and the premium increases as you get older - which means it will cost more to renew.

Why would you ask this on Yahoo questions instead of looking it up on the web and getting a little more reliable info? Or better yet, call and insurance comapny and ask...

Answer 3

first of all, do you artwork for LIC as an agent? for sure, No!!! tell me why LIC has discontinued a huge record of their rules? Is it because they decide on to introduce better gimmicks to their sport? coverage rules at the instantaneous are not an funding in spite of everything, and the majority get fooled via the rules. Indians do not decide on coverage rules, they decide on solid education, it truly is so expensive. i imagine those rules serve the agent better than everybody else. people should be MADE conscious that coverage isn't an funding because the returns are too low after adulthood, yet for someone who believes to have achieveable of lack of life, that is great, or at the same time as the spouse relies upon on the husband one hundred%. They promote a lot in India as many of the Indians stay in Rural aspects, that are like having fish pond mentality. The coverage brokers purely stay like parasites!!! it really is this style of shame & purely imagine India's inflation cost, at an generic 7% on account that 1969, while, the reassurance usually pays 5.5% in a good number of circumstances. So, what can that money purchase after 10-15 years ??? Peanuts!!!

Answer 4

I regret to inform you that you are receiving wacky information. In fact, what TRUTH has to say doesn't even make sense logically.

Who cares how much your company paid out in Term death claims? The question is how much is it in relation to the amount of insurance in force?

TRUTH...Here is the truth...if Term paid out soooooooo frequently, they couldn't afford to charge you dirt cheap premiums. Think about it logically for a moment...you are charged $1000 per $1 million dollars of death benefit (for example). How often could they pay out $1 million dollar death benefits when the term premiums are $1000 or $10000 per year.

In actuality, the difference in the products is simple. Term guarantees death benefit for a certain period of time (or term). You may have the right to convert into a permanent product, however typically the company offers its less competitive products for conversion.

Whole life is permanent insurance. In theory, it is supposed to give you a death benefit for your lifetime. However, rarely is this the case, without paying more than you anticipated. Most policies contain terminology confusing to the general public, and misunderstood by 99% of agents selling the insurance. The key is knowing what you are getting yourself into.

Term gets rid of the problem short term (5, 10, 15, 20, or 30 years), and is relatively cheap.

Permanent coverage solves the long term issue (assuming that the person who sold it to you understands the concept of contractual analysis, which most don't)

Both are risks, just in different ways.

The biggest problem is...finding an agent who knows something about life insurance.

Answer 5

If your planning living to be old choose always whole life.Term life stops at I think 65 , whole life is as long as you live. Whole life is the one most chosen because it is for a lifetime does not stop until your death or you cancel.

Answer 6

And this is in Marriage & Divorce because.....................