The main reason why we want to get a life insurance is to ensure that in case something will happen to us, the people we care about are protected. How much do you need to support the needs of your family, to pay debts, or to settle of your other affairs?
Once you have determined your priorities, deciding the amount of coverage will be easier.
After than, you need to know which insurance policy will suit yo your needs. You must ensure that the premiums is fit into your budget.
The Benefits of Term Insurance
If you want a much cheaper insurance, you can choose term insurance. In this case, the coverage will be pure insurance.
If you choose this type, you will be paying cheaper premiums but with the sufficient amount of protection.
When can we say that whole life insurance is fit for an individual.
For some people who want to secure their financial stability, whole life insurance is a good choice. Below are some of the advantages of selecting a whole life insurance:
1. There is an assurance that there is a return that can gradually increase.
2. The policy holder will have an insurance that is permanent and will last a lifetime.
3. Since the holder have a share to the earnings of the company, he will only pay for the premiums for the specified number of years, then the earnings will be used to keep the insurance going.
But a whole life insurance is also disadvantageous for some reasons:
Putting your money in a whole life insurance is risky. Insurance broker won’t usually focus on explaining the risks as they will concentrate on the dividends that you will surely earn if you will buy a whole life insurance. One risk is when you buy a whole life insurance and pay for your premiums for few years, then you need to stop paying due to financial problems. If this happens, there’s a possibility that you will lose all the money you’ve paid and you won’t get anything. Normally, you need to pay premiums for at least ten years before you can acquire the cash value of your money.
Also, it’s important that you know that when you borrow any amount from the policy, it is treated as a loan with interest.
What to Choose Between a Whole Life and Term Insurance
The factor that you should consider when choosing between a whole life or a term insurance is human element. You’ll fit in the whole life insurance if your conservative and you are sure that you can continue paying your premiums without borrowing from the cash-value if not really needed.
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