Whole Plus Term Life Insurance — Should You Combine These Two?
Both whole and term life insurance policies together is a recommendation that some insurance specialists often make. Is this a good idea? If not, why is it wrong? Is this good advice and if so is it for everyone? You can find out more in this segment…
It is important to explain the difference between both policies so that you fully understand, before we begin: As long as you keep up on your premiums, you can have whole life insurance forever. Cash value is a benefit of a whole life policy. You have access to the money in the event that you need a loan. You also have the option of cashing in your policy at any time. It has very many advantages. However, it’s also very expensive.
The other option is term life insurance which will only cover you for a set amount of time, usually from one to 30 years. With term life there is no cash worth of the policy. It just gives you plain insurance for the period chosen. If you outlive the term, your beneficiaries get nothing. If you do die within your preset term then the pay out is the amount of coverage that you purchased. The benefit here is that you are provided with additional coverage for every dollar that you spend on premiums.
Let?s move on now that you have an understanding of the two types of policies…
Primarily, you should know that my advice to you is no nonsense and very useful. But, since every situation is different it will be up to you to come to a decision for your best interest.
Whole life insurance is an insurance plan that is smart to buy when you are younger. You?ll generally get the best rates in your younger years. It is important to make sure that you purchase sufficient coverage. Furthermore, you’ll be able to build cash value.
Term life is a policy that you would purchase when you begin to develop some risk. These periods include when you start raising kids, have outstanding mortgage, are exposed to many hazards in your place of work and other situations like these.
Some disagree, they say that your kids will grow and move out, your house note will get paid off and whole life is a better option.
The gamble with term life is that your demise has to fall into that term pocket or it is useless even though it is much cheaper. Balance your set term to provide coverage during those years that you are exposed to the most risk.
Let’s assume that you have young kids and still have an outstanding mortgage. Let’s say you project it will cost a total of $1 million to put them through college of your dream, help them get started in life and help your spouse maintain them at the level of comfort they are used to. Don?t forget to add in the 25 years of mortgage payments that lie ahead to the tune of $500K.
Covering yourself is as simple as buying a 25 year term life plan with coverage of a million and a half bucks. At the end of this time there won’t be any mortgage to pay and your kids should now be fending for themselves.
If you live beyond the term, you won’t need that level of coverage and you can make do with your whole life policy alone. It is always a relief to know that when you are the most vulnerable that your family is covered.
Be clever. Do thorough comparison shopping. Do this by getting a number of quotes from a variety of insurance companies. Hopefully, the total you’ll pay for this combination will be much less than you thought.
Tagged with: Insurance • Life Insurance
Filed under: Life Insurance
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