Whole Life Insurance Cost vs. Term Life Cost

If you are thinking about buying or surrendering a whole life insurance policy, the first thing you should do is consider your needs. Which type of policy would best suit your lifestyle and family situation? Permanent life insurance is different from a term policy in several ways. A whole life insurance policy is permanent. It is never ending - it covers you for a lifetime and ends when you die or turn 100 years old. The type of policy you choose should depend on several factors. It will depend on your age, family needs, income, and health. Life insurance policies are designed to assess each applicant as an individual, not as a group. Your policy might be very different from your senior-aged neighbor.

Whole Life Insurance

A whole life insurance policy is more expensive, overall, but has more features. You will have to pay the monthly premium, set by the insurance company, which covers the face value of the policy and the cash value. Many people prefer permanent life insurance policies because they last for a lifetime and they can use the cash value account. This account allows the policyholder to save money for emergencies or to use as collateral. It is for this reason alone that many people like whole life insurance policies. Whole life insurance policies also offer profit-sharing bonuses. This is called a "participating policy." You are participating in the company's financial vicissitudes. Every year, if the company performed well, they distribute dividends to their policyholders.

Ending the Policy

Giving away your policy, selling it or cancelling it will trigger fees and possibly taxation. If you cancel your policy, you should be able to get back the full amount of your cash value, minus any fees and expenses. You could also transfer the policy to a trust fund or a spouse and there would not be a fee associated with that action. If you sell the policy, however, be prepared for tax consequences. Since the laws of taxation change rapidly, talk to an attorney about your concerns.

Term Insurance

A term life insurance policy, while less expensive up front, has fewer features. There is no cash value associated with a term policy. A policyholder only pays for the face value of the policy. You also have to renew a term policy every so often. You and the agent will decide on the term duration and the amount of face value you need for your family. A fee will apply each time you renew the policy. You also have to re-qualify for the life insurance again.

Examine the threshold details of a policy. For example, if the threshold limit is $100,000 and you buy a policy for $90,000, you might pay around $100 for the premium. However, if you choose to buy the $100,000 policy, your premium might be $85. You actually get a discount for buying the threshold amount! Ask an insurance professional if they offer this type of policy.

Free Insurance Quotes

In order to choose which type of life insurance plan might be best for you, get some free quotes on this site and start to compare the various rates. Each policy has its advantages and disadvantages, so look through the articles on this site and start to educate yourself. You can even talk to life insurance agents and get some answers right now. They can help you figure out how much you can afford to spend each month and what type of policy would benefit your family the most.