There are basically two kinds of life insurance: Term Life Insurance and Whole Life Insurance. Term life insurance insures your life for a term: 5 years, 10 years, 20 years, while Whole Life insures your life for, you guessed it, your whole life. Term life insurance is generally less expensive because it only insures your life for a term and only pays out in the event of your death. Whole life is more expensive because the premium charged is for your whole life and it offers more benefits than just the single death benefit paid upon your demise.
Term life insurance is like renting or leasing. You insure your life for a term, you pay the premium and if you die during that term, someone receives the money you insured your life for. If you manage to survive that term, the insurance company keeps all your money and the contract is ended. Now that is not a bad thing. During that time you had the peace of mind knowing that if you had died, you were taking care of your wife, your kids, someone important to you. All for a modest expense. Most policies are renewable without your having to reprove your insurability, though now that you are older, the premium will have increased. As you get into your later years, terms you are eligible for decrease because your life expectancy has also decreased. Many people purchase term life insurance for a vulnerable period: they want to be insured until the kids get out of college, or until the house mortgage is paid off. If you are looking to purchase life insurance for the long haul, I suggest you take a look at a whole life policy.
Whole life insurance insures your life for your lifetime. Premiums are higher than term insurance, but your rate is locked in at the age you start the policy. The premium does not go up, while the rate increases with every renewal of term insurance. If you insured your whole life with term policies you would end up paying more in the long run because of the increasing premiums while the whole life policy charges a continuous steady rate.
Whole life insurance offers more benefits than the one time death benefit of term insurance. The insurance company is investing your premiums and your policy is building up cash value. The company also pays out dividends and that also increases the value of your policy. Over time you could use these dividends to pay for a portion of or even all of the premium of your life insurance policy. You can use your whole life insurance policy as collateral, and you can even take a loan from your policy! You can also surrender your policy and use the proceeds to supplement your retirement. Over time the accumulated dividends and cash value of the policy could add up to a substantial nest egg!
When purchasing life insurance you have to consider what your goals are. Are you going to use this to supplement your retirement, or do you just want to make sure the house is paid for if you die? How much coverage can you comfortably afford? Discuss all these things with your insurance agent. Have him show you illustrations of what a whole life policy could do for you and make an informed decision.
Douglas T. Zinkevicz has had over a decade of experience servicing the auto,home and life insurance needs of his clients.Let him help you with your insurance questions by visiting http://www.insuranceplus.blogspot.com.