zTermLifeInsurance Blog
Tuesday, September 07, 2010
- 22
Jan
2010 -
Term Life Insurance and Whole Life Insurance
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Term life insurance is not the same as regular whole life insurance. While both pay out a certain sum of money in case of the death of the insured, term life insurance works very differently. It insures a person for a specific period of time only—say three years or five years.
When the term expires, the insured must look for coverage elsewhere, or renew the policy at the current rate—i.e., the rate is by no means fixed. Term life insurance is generally useful in case the applicant wants a higher value of insurance for a certain period—say, until his/her child finishes college, or a home mortgage is paid up.
While whole life insurance covers a person throughout their life, term life insurance is fixed in the period of coverage. Also, whole life insurance eventually pays out—whether you live to be a 100 or 25. However, only1% of term life policies end up paying out.
Term life plans offer great value for money. Less expensive than whole life insurance plans, they are ideal for periods in life where just that extra coverage is needed. It is also helpful for people who need life insurance for short periods that they are out of the country, if their whole life insurance is not valid during life abroad.
