Life insurance can be categorized as either “whole life insurance” or “term life insurance”. Essentially, the difference is that whole life insurance is designed to provide coverage for the duration of policyholder’s life while term life insurance provides life for a specified period of the policyholder’s life.

In addition to providing coverage for a lifetime (or until the policyholder reaches 100), whole life insurance also builds up cash value over time. Coverage remains in effect for the policyholder as long as premiums continue to be paid.

For a whole life policy, the premium remains the same cost (in contrast to renewable policies where the price can change). The cash value of the policy is also guaranteed, therefore making it safer, but these policies require the whole of the premium to be paid in order to keep them active.

Given the steady, predictable payments and payout, whole life is an excellent option for most people thinking about the long term future. Besides being more or less permanent, it also enables you to build up cash value free of taxation. If you decide you don’t like your policy after all, there’s no worries. You can cancel it at any time, and get the value of the insurance in cash.

With certain whole-life insurance policies, there is the possibility of gaining more cash value than what the company guarantees that you will receive. You are able to get loans to borrow from this amount. However, the guaranteed cash value depends on the life insurance market as a whole as well as your own interest rates. The company’s future financial ups and downs may also affect the amount of guaranteed cash value. However, variable life insurance policies lack a guarantee at all, making whole-life policies generally safer. Advocates of whole-life policies suggest that you insure that your rates can compete well with your other investments.

Whole-life insurance policies offer more security than term policies, due to fixed premiums and a guaranteed value. There is also the ability for you to earn dividends, added to your policy based on your insurance company’s market performance and profits. Whole-life policy interest rates are usually adjusted annually as opposed to monthly (as with term policies) and there are many policy options offered, allowing you to choose one that bests suits your needs.

Now, as a final caution… this may seem silly, but don’t buy whole life insurance unless you can afford to pay it off for your whole life! Buying a long term policy and then letting it expire is a complete waste of everyone’s time and money. Since life insurance prices are best in your youth, try to buy the policies you want to hold out through your lifetime when you’re young. If you can’t afford whole life insurance right away, you should at least get term to tide you over until you can afford whole. The premiums involved in whole life insurance policies may seem steep, but they’re high because they are a one hundred percent promise of paying out in the end if you don’t let it expire. You can never decrease your payments with whole life, but it’s worth it for the unmatchable sense of security it provides.

Roughly categorized as a pre-need investment, life insurance falls into two categories - the whole life and the term insurance. What?s the difference between the two? Here are the key points.

Whole life insurance policies will cover you for your whole life or until you reach the age of 100. Of course you have to pay all of your premiums in a timely manner for this to apply. Another advantage to whole life insurance is that it builds up cash values while term life insurance does not. It is most common for the cash value to start building once you have paid your premiums for one year. Another advantage to whole life insurance is that the premium is fixed at the same rate for the life of the policy. With term life insurance you will face higher premiums when you renew your policy because of increasing age. It also required that you pay your premiums as required by your term insurance policy.

It is best to have the whole life insurance coverage because your paid premiums will build up and you can be assured of a cash value which you can claim anytime or even if you decide to stop paying your premiums. This type of insurance policy will allow you to save and accumulate cash value which can be paid on tax-installment basis.

Depending on the performance of the stock market and how interest rates are credited, it is actually possible to receive a greater amount of cash value than the amount that is guaranteed with your whole life policy. Future performance of your chosen insurance provider may also affect cash values. Variable whole life insurance policies do not have guaranteed cash values as whole life insurance policies do.

As a policy holder of whole life insurance, the insured individual could also avail of a loan against his share of premiums in the company. Instead of borrowing money from other sources, the policy holder could apply for a loan in the amount commensurate to his contribution of the life premiums.

A minimum guaranteed benefit is offered on whole life insurance and the premium will never change. This is not true with term life insurance where the premium is subject to increase on renewal. Earning dividends is another benefit with whole life. Dividends are based on the overall return on the company?s investments. If you have a universal life insurance policy, you will receive interest that is adjusted on a monthly basis. A benefit of a whole life policy is that interest is adjusted on a yearly basis.

Yes, whole life insurance could be a great investment as it demands fixed premium and paying period is quite longer, but the advantages are really beyond compare. It?s a great investment. So, now that the high and quality trade-offs of whole life insurance are herewith mentioned, try to grab a whole life plan, and surely rewards will be great for you. If in case budget would not suffice, there is always the term insurance which could be the least preference, right? So, hurry and get a whole life plan now.

Graham McKenzie is the content syndication coordinator a leading South African Life Insurance and Life Cover website.

There are so many reasons to get life insurance. You want to provide for your loved ones after you are gone. Maybe you want your business to keep running after your death, or donate to a cherished cause. Life insurance should help ease your worries, but the process of researching and purchasing life insurance can be confusing and complicated.

Figuring out how much life insurance you need is known in the insurance business as an estimate. For a start, have a seat and ponder over how much insurance you would buy if you didn’t have to worry about the pricetag on it. Now take that idealized insurance idea and look into the market to see how much it would actually cost you. Don’t try to acquire a policy you can’t afford to maintain for the long haul. It’s better to have a slightly cheaper insurance policy that’s there when you intended it to be, than it is to have more expensive life insurance that you have to drop before you pass.

Term life insurance is active for a specified amount of time, from five to thirty years or so. Increased longevity and basic value of a term life insurance policy will increase the cost to you. Notably, this kind of insurance gets very expensive as you get older. But it’s also a very cheap form of insurance other than that, and is flexible enough to help many kinds of customers.

Term life insurance is so called because it insures you for a specific term of years. The term is typically between ten and thirty years. There are even some life insurance policies with terms as short as one to five years to meet the specific needs of some customers. The shorter the term, the less expensive the life insurance policy will be. Policies with higher face values will cost more. Term life insurance is usually the lowest in price and helps many people meet their life insurance needs.

Whole life insurance covers one’s entire life, as long as the policy is held. To keep the policy, premiums must be paid or the policy must be paid up. Whole life insurance can often be paid up over time, usually around ten to twenty years. Because everyone will certainly die and whole life insurance requires the insurance company to pay regardless of when you die, this type of life insurance policy costs more than term life insurance. The benefit of this added cost is that the policy never expires.

When shopping for life insurance, remember to keep in mind what type will work best for you, or f you’ll be best served by a combination of insurance types. Also remember to balance the policy amount with the cost of the premium to be sure that you get the best deal.

Using this and any other relevant information available to you, decide which type or combination of life insurance best suits your needs before purchasing a policy or policies. Balance your life insurance needs with the costs and your family’s budget.

Susan Reynolds is the webmaster for a leading South African Life Insurance website. For more information visit: http://life.insurance123.co.za/

The main driving force for people, in my experience, when they are thinking about a whole life insurance product is that when compared to level term insurance it isn’t dead money. This is likely the main driving force behind most peoples thinking.

For the majority of people level term insurance is easily understood in that it only pays out upon death of the insured person and should that person survive the plan then it ceases without value and this is why it is considered to be dead money. However, what needs to be further understood is that level term insurance is specifically designed to make insurance available for as little money as possible which means the plan has no cash value

The opposite is the case with whole of life assurance. Whole life assurance builds up a cash value within the plan and whist it is not a huge amount of money it is enough to give people the impression that their money is not going to waste. But conversely this type of plan is quite a bit more expensive than the comparable term and this is due in part to the fact that it builds up a cash value.

Does this resolve your requirements for life insurance and if it doesn’t then what are the other choices you have open to you. Once again as I tell my clients, a whole of life insurance plan is a marvellous product if they require insurance for life that isn’t bound by a fixed term (for instance to cover the term of a mortgage), if they simply need life insurance in perpetuity, whole of life insurance is the most suitable to buy.

Whole of life insurance is exactly what it says it is, it runs for all of your life and although it does have a cash value it should never be considered as a savings plan because that is most definitely not what it is. If it’s savings you are thinking of then there are many more efficient plans out there in the market which are completely focussed on saving money and which will produce far more for you than a whole of life insurance plan.

Now supposing you want life insurance but it is beyond your thinking that you are not going to get any cash return if you don’t die, you have to decide what it is you can do. The first thing would be to recognise that any term plan as opposed to a whole of life plan will show a big difference in the comparison, meaning that you will have to spend considerably more on the whole of life.

My suggestion would be to calculate the difference between the two plans and instead of buying the whole of life insurance, buy a term plan for the required time you need it, and then with the money saved, which is the difference between the two, buy a monthly investment plan. This could take the form of a savings plan or a maximum investment plan,

You will be amazed at how much more money you will receive on the returns than with your whole life insurance contract. Furthermore, as the plan will be on the basis of ten years with an option for renewal, you will have a higher adaptability with the money you save. But think on and remember when making this your choice you will not have any life insurance for your entire life. Therefore, this decision would be only for those people who have no need to cover the whole of their life. Needless to say, this is something that needs to be carefully thought about.

Independent financial advisers and certified financial planners should always be your first point of contact for all information on your life insurance and saving options. They know the availability of products, what their future performance will be and they will be able to talk you through them all.

If you need a list of reasons to get life insurance, here are a few to get you started. Life insurance is one of those things that few people could fail to benefit from. It offers peace of mind to the policy holder and financial support to its beneficiaries.

The most obvious part of life insurance is that in the event of your death, it will help to provide for your family. It works as simply as this: because you have been paying your monthy premiums, the company that holds your insurance policy will agree to pay a specified lump sum of cash to the benificiary listed on your policy (this is the person or people you designate to receive the death benefits).

That means that even if you die, your family can pay off debt, keep their home, go to college - in essence, your family will be able to maintain its lifestyle without your assistance. Of course, all this depends on which type and how much life cover you choose to buy.Your beneficiaries are not restricted in how they use this money.

In some cases, the payout is used to pay off specific debt. Because debt can be a large part of our financial picture, many people choose to link their largest debt obligations to a decreasing term insurance policy. For example, if you choose to cover your home loan with decreasing term cover, your premiums for this cover will decrease as you make your loan installment payments. If you die before the loan is paid in full, the insurance company will pay the balance of the loan directly to the bank.

If you wish to your death benefit to cover more than outstanding debt, consider whole life insurance. With this type of cover, you make premium payments over the course of your life. You may choose to pay level payments or arrange to pay higher premiums at the beginning of the policy which will allow you to stop making the payments at 60, 65 or 85 and retain your coverage. In return for your payments, the insurance company will pay a death benefit in the amount you choose to your beneficiaries upon your death, regardless of how long you held the policy.

South Africa is only one of two countries where life insurance is available for people who have tested positive for HIV or have AIDs. The premiums are slightly more expensive and the insurance companies will need policy holders to continue with anti HIV therapy.

Be sure to deal with well known, reliable companies with a history of making the payouts they have agreed to. Most experts suggest approaching at least five companies to educate yourself about the different life insurance plans and options available.

Bear in mind that a life insurance policy may be the only protection your family has from financial hardship in the event if an unexpected death. The peace of mind coming from the knowledge that your family will be provided for more than offsets any inconvenience you may experience now.

A very difficult product to by is life insurance. Without a precise need for example of a loan, mortgage or inheritance tax liability, many people wonder about the amount of cover they should to take out for life insurance.

The majority of folk recognise their need to protect their family with life insurance in the event of their death. They are conscious that their dependents should have enough financial protection which will pay out following their death that will maintain the standard of living they have been used to. Furthermore, their recognition of this goes beyond their understanding of mortgage cover or loan and inheritance tax protection.

Most people accept the need for parity between the incomes which they generate now and those which need to be provided at a later date. However, taking all this into account how can we ensure the life insurance plan we commit ourselves too will pay an adequate amount comparison to our salaries even though this amount is usually a lump sum.

Setting aside assumption and intricate calculation that may neither be accurate for future situations, nor scientific, the majority of financial advisers reckon using a ten times formula. In other words, if annual income is 20k then a lump sum would be 200k. However, taking into account inflation on investment returns etc and if the figures prove to be incorrect in the future, then a shortfall in income may be generated.

Being aware of all this begs the question how can it be solved and why. The solution is in how family income benefit works. With life insurance the benefit is paid in a lump sum which is then invested by the recipients, producing an income they hope will suffice for the time it is required. On the other hand, family income benefit does what it says on the tin, it simply produces the income.

A family income plan is taken out to cover an income and not for a lump sum benefit. So say you want to cover a 30,000pa income rather than taking out 300,000 as the formula suggests you take out a family income plan for 30,000. You include indexation benefit which makes sure that when a claim takes place the income rises with inflation and you basically have an income replacement benefit when someone dies.

When taking all this into consideration, the family income plan will be the most suitable product because all the doubt surrounding life insurance is removed, that is providing it is the income that is to be protected or an amount of money each year rather than a capital amount like a loan or mortgage etc.

Considering most people are without the tenacity, ability or wherewithal to generate an income through investment, if they are the ones who are to be protected, then why compel them. Simplify their lives by giving them an annual set income with pay rises attached; ensure you put in place for your family a family income plan.

A life insurance policy is exactly what its name suggests’an insurance policy covering the loss of your life. You buy your life insurance policy from an authorized agent, paying the insurance company a set monthly, quarterly, or annual premium. In return, the insurance company agrees to pay out a contracted amount of money after you decease. The proceeds from your life insurance policies go to the beneficiaries you designate, typically in a single lump sum payment. If your do not designate beneficiaries for your policy, then the insurance company makes the lump sum payment to your estate.

There are two basic kinds of life insurance: Term insurance, also called protection policies. These policies are temporary, providing coverage for a specific number of years for a set premium.

Term policies have no cash value. Basically, you buy protection in the event of death and nothing else.

Whole life, also sometimes called permanent life insurance. The objective of whole life insurance is to accumulate money through the payment of regular or lump-sum premiums on which interest is paid, while also providing coverage in the event of death. Whole life coverage is sometimes also called permanent life insurance. The premiums you pay for whole life do not change, and there is a fixed, guaranteed cash value for the policy. The funds accumulated from the payment of premiums each year can be paid to you whether or nor you die, for emergencies, vacations, retirement, or other expenses. If you take these funds for other purposes, of course, they are not paid when you die.

The type of coverage you buy generally depends on the goals you want life insurance to accomplish. Many people find that term coverage suits their needs, if they just want to make sure that their bills are paid and that their heirs receive some cash after their deaths. Other people want a reliable source of cash accumulating year after year as they pay their premiums. You can speak with qualified life insurance agent to determine which kind of policy is best for you.

The type of life insurance policy you need will depend on why you are purchasing the insurance and the goals you want the insurance to accomplish. Most people find that a simple term life insurance policy suits their needs, while others want to make sure their bills are paid and their heirs receive a settlement after their deaths. You can discuss your needs with a qualified life insurance provider in order to determine what policy is best for you.

Life insurance usually covers death, dismemberment, accidental death and serious illness, depending on the type of policy purchased. Proof is required in all cases before payment will be made on any life insurance policy, regardless of the policy type. To purchase life insurance, you will need to get a quote from a qualified insurance provider, give an accurate picture of your medical history and receive a physical examination from your doctor. Once you pass your physical exam and your medical history is approved, a premium is required. After the premium is paid, then your life insurance policy is activated. A qualified insurance provider can also answer any specific questions you may have, as well as help design and tailor a life insurance program to help meet the needs of you and your family.

Life insurance can be complicated to understand, especially when it comes to how the premiums are calculated. It?s not as simple as other insurance policy purchases. First, your life insurance cost is based on your health at the time of purchase and a risk assessment that is conducted by the insurance provider. If you are unhealthy and/or engage in risky behaviors, expect to pay higher costs for your life insurance than someone who is healthy and doesn?t put themselves at risk. That is why a physical examination is required before the provider issues a life insurance policy.

Once the physical exam is conducted, the life insurance provider will review the exam results, your family?s medical history, your driving record and possibly other medical reports. A credit report may be obtained as well.

Life insurance companies usually ask you to fill out a questionnaire about your lifestyle and health issues that do not come up during a physical. However tempting it may be to try to sway the results, be honest as you answer the questionnaire and as you fill out your medical history. Any dishonesty anywhere in your application will give the company grounds to cancel your policy in the future?perhaps after you are gone and cannot do anything to contest it.

From all these reports, the insurance company assigns you a score reflecting your risk. That is why the premium you actually pay may not be the same as the quote the agent gives you when you apply for coverage. If the company finds that you are at a higher risk level than originally assumed, your premium will almost certainly be higher than your quote.

There are ways to lower your risk. Take good care of yourself. Maintain a healthy weight. Eat well-balanced meals and exercise on a regular basis. If you smoke, stop. Drive safely, and don’t get tickets. Auto crashes will also raise your life insurance premiums, not just your auto insurance premiums. In general, be smart. Don’t take unnecessary risks

The insurance provider will also take into consideration things that you cannot control, like your age and gender, when determining your life insurance premiums. That is why it is important to improve your health and lower your health related risks. Risk assessment policies vary, depending on the life insurance provider. That is why it is a good idea to do research, ask questions and get several quotes before deciding on a life insurance policy.

Insurance provides us with protection against risk, and owning insurance policies is a normal part of modern life. While insurance has been around for hundreds of years in one form or another, most of the familiar kinds of insurance we have today are actually a newcomer on the historical scene.

Insurance itself can be traced back to the ancient Chinese, around 5000 BC, as a way to protect traders. There are also stories of a more humanistic form of insurance, with neighbors helping neighbors and settlers taking care of each other during difficult periods in history. While that has no monetary value attached to it like our current insurance policies do, we consider that insurance because of the gesture of caring and providing for someone else. What we think of as life insurance didn’t come along until later.

In ancient Rome there were “burial clubs.” Members of these clubs were protected against funeral costs and their survivors were given financial aid. The origins of the burial clubs were religious. The Romans believed that if someone was not given a proper burial, he or she could not find peace in the afterlife. For all but the very rich, burial clubs were essential to finding peace in death, because every proper funeral required a large and often lavish celebration.

Modern life insurance dates back to the late 17th century in England. Life insurance was originally designed to protect traders and merchants. The first insurance providers would meet their customers at coffeehouses and pubs to draw up insurance contracts. These were the common meeting places of that era. This form of life insurance was designed to protect those who brought goods into the community and those who sold them. It was a way to protect and insure commerce.

The first American life insurance company appeared in 1732 in Charleston, South Carolina, but at its inception, the company only offered fire insurance. Life insurance policies were not offered in the Thirteen Colonies until the 1760’s, but providing them quickly became a big business. After the American Revolution, there were issues with life insurance policies for slaves. One New York insurer supposedly issued 485 policies on the lives of slaves just in two years in the decade of the 1840’s. However, the sale of life insurance on the lives of slaves stopped several years before the 1863 Emancipation Proclamation. The insurance companies, in the North, were ordered by their states to search their records to purge any policies that indirectly supported slavery. There is no record of any such policies being found.

Whichever type of life insurance policy you hold today, one thing for certain is that the history of life insurance has been rich and complex. There is at least one constant, however, that has never changed. Life insurance protects our heirs from whatever life sends their way. Ask any questions to a qualified life insurance agent who can help you find the right life insurance protection for your loved ones. A qualified insurance agent will consider the specifics of your situation and help you find exactly the policy you need.

It’s hard to think about what happens after you die. Whether you believe in a certain religion or not, death is a scary thought. It’s also scary to think about what will happen to your loved ones after you passed. Have you considered life insurance?

Life insurance is the only true way to protect your family financially after you pass. While it’s common to give the money over to your spouse, other people sometimes reward the money to other beneficiaries, including brothers or sisters, children, or nieces and nephews.

Life insurance can stay relatively cheap packed with great benefits assuming you meet a set of criteria. It’s also important to start young and not open up the policy when you are entering a mid-life crisis. Start young because you never know when you’re going to die.

Again I stress the importance of opening up a policy as soon as possible. You never know when death is going to come knocking at your door. It’s unfortunate to think about, but a cold and harsh reality.

If you have a broker, discuss different terms and policies. Try to reach an affordable policy filled with outstanding benefits.

You can prove to the insurance provider that your health is outstanding by taking their required medical examinations.

If you take out the plan early, you now have an option of halting payments when you reach retirement age. If you are concerned about still paying the premium when you no longer make as much money as you did when you worked, you can stop paying the premium. The insurance provider understands and will still award the “fixed term” rate when you pass. But you must start early to enjoy this pleasure.

Never waste time on this earth. The same holds true to life insurance and is something you can trust on after you are no longer here.