Permanent And Term Life Insurance: Combine Them?
Some expert?s recommend that you buy a combination of both whole and term life insurance policies. Is this in your best interest? If not, why is it wrong? Why then is this not a good idea? We’ll look at this in this article…
Before we go further, I’ll like to ensure all my readers understand the difference between these two life insurance policy types: Whole life gives you coverage for your entire life provided you do NOT refuse to pay your premiums. It gives you cash value. You can take out a loan against it. If you so desire, you can turn your policy in for a cash amount. This kind of policy can be very advantageous. 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. It does NOT build cash value. It just gives you plain insurance for the period chosen. If you don?t pass away during your set term then you get nothing. If you pass on within the chosen term, they get paid the coverage amount you bought. Because of its very limited features, it gives much more coverage for each premium dollar paid.
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.
Normally, it is advised that whole life is purchased when you are a young adult. The reason is that you will get a better price when you are young. Buying it young is a great idea as long as you buy an ample policy. Since the policy builds cash worth it is crucial that you remember this.
It is for the periods of peak activity that they recommend that you buy a term life policy. 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.
Many beg to differ, standing their ground that these climaxes in life will pass and term life is not worth the added expense.
The cheaper option is obviously term life in terms of getting your money?s worth but remember that it is only for a specific amount of time. All you have to do is to buy a policy that has a term long enough to cover such a period when you would need life insurance the most.
Presume that you have growing children and some time left on your mortgage. You want to provide for your children and offer them educational options as well as ensure that your family is always provided for in the manner that you have given them, so this will cost somewhere in the ballpark of a million bucks. Let’s also assume that you have an outstanding mortgage of $500K that will take the next 25 years to pay off.
All you’ll have to do is get a term life policy for $1.5 million for a 25 year term. Term life can provide a blanket of security for your family when they need it most, before they are grown and your mortgage is fulfilled.
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. Get a bunch of different quotes from several insurers. This is how you will get the best price for your combination insurance policies.
Tagged with: Insurance • Life Insurance
Filed under: Life Insurance
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