What are the Advantages of Whole Life Insurance Over Term life Insurance

People often wonder about the advantages of whole life insurance over term life insurance given the fact, that the latter is significantly cheaper. But before you decide on the life insurance coverage that is appropriate for you it is imperative to compare the basics of both types of coverage. One of the primary differences in these two policies is the tenure of coverage; while for term life insurance you are only covered for a specific period of time; whole life insurance like the name suggests covers you for the rest of your life or till you are 100 years old.

Getting the right type of insurance policy is not only crucial for the financial independence of your family in future but also it can make a difference to your financial plans. So it is imperative to compare the pros and cons of the different types of coverage available before purchasing one. It may be too late to regret your decision after the purchase has been made.

When you purchase term life insurance, the family/heirs will only get the payout if the policy holder dies during the term of the policy. However, if death occurs after the expiration of this specified period there will be no pay outs; which may leave your family in a financial quandary in the event of your death. On the other hand when you go for a whole life insurance policy you are covered for life and there is no specified period for the pay outs which means that your family will get guaranteed pay out in case of your demise.

If you opt for a whole life insurance, you will be able to take advantage of the cash build up component of the policy. The cash accumulated value starts from the first year of the policy, this essentially means that you are insuring yourself and investing at the same time. Another advantage is of course the fixed premium amount as opposed to the increasing premiums of the renewable term policies.

Not only is the investment feature guaranteed for your whole life but your coverage will never change as long as the premium is being paid so whole life insurance is a prudent investment decision. With the cash accumulated value, you will be saving on a tax differed basis. This means at the end of the day you will have something to show for all the premium payments that you made each month. However with a term policy even though the amount is small, it is lost after the expiration of the policy because you don't get any of it back.

When you consider the multitude of advantages associated with a whole life insurance policy, you may find that even though your premiums will be slightly higher you may be better off purchasing the whole life coverage instead of the term policy.