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| DIFFERENCE BETWEEN TERM LIFE AND WHOLE LIFE INSURANCE |
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Whole life insurance is life insurance that remains in place for the entire life of the insured person, or until payments on the whole life insurance policy cease. This kind of life insurance is usually a smaller amount than a term life insurance policy, and is meant to cover legal expenses and burial expenses after death.Term life insurance is covering only a specified period of time rather than an entire lifetime. Term life insurance can be bought for specific periods of time ranging usually from a year to 30 years, although there are variations of these. Term life insurance policies are usually bought to cover life changes including the birth of children or the incurrence of a large debt like a new home or a new car.
The basic difference between term and whole life insurance is a term policy is life coverage only. On the death of the insured it pays the face amount of the policy to the named beneficiary. Whole life insurance, on the other hand, combines a term policy with an investment component. The investment could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against. With both whole life and term, you can lock in the same monthly payment over the life of the policy. Term life insurance provides the insured's beneficiaries with money in the event of his death. It serves no function beyond this. Whole life insurance provides the insured with certain financial benefits beyond the basic death benefit. As with a mortgage, you can borrow against a whole life insurance policy. Therefore, owning a whole life insurance policy may enable you to take out money for home improvements, retirement, and so on. Term life insurance is usually much less expensive than whole life insurance. It's usually a better choice for young families who are still building their wealth. |
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