The advantages of term life insurance.
Copyright 2005 Stacey Zimmerman
There are two main types of life insurance that are available to
everyone; there is whole life insurance and term life insurance.
Many people are unaware even of the existence of term life
insurance, which is a shame because term life insurance is
usually much cheaper than the whole life insurance equivalent.
If you are a shrewd investor then term life insurance could be
just the option you are looking for. It can work out thousands
of dollars cheaper every year giving you that extra money to
invest yourself. Insurance companies are normally very
conservative when investing your money; some people like this
while others prefer a more risky but greater return investment
opportunity.
Cost.
The obvious advantage of taking a term life insurance policy
over a whole life insurance policy is the cost. Often a term
life insurance policy will cost you hundreds of dollars a year
but a similar whole life insurance policy can cost as much as
thousands. In fact, there are some term life insurance policies
that will cover you to the value of $100,000 over a ten year
term that cost less than ten dollars a month. Obviously, similar
factors are taking into consideration when applying for term
life insurance as they are when applying for whole life
insurance; factors such as health, family history, lifestyle and
age.
Flexibility.
Term life insurance offers you a greater level of flexibility
over it's whole life insurance counterpart. For less money you
are able to take out short 10, 20 or 30 year plans and you are
able to determine the exact level of cover that this offers. You
may have a 4-year-old son and a partner who has opted to stay at
home and look after him. Right now he is dependant on your
earning money to feed, clothe and care for him but in twenty
years he will have finished school, finished college and
hopefully got himself a job. This means he is no longer your
dependant and you may not need to make financial allowances for
him in your life insurance. Alternatively, your mortgage may
expire in ten years. You won't need to pay to cover your
mortgage once it has been fully paid up.
Investment.
A term life insurance policy costs you hundreds, even thousands,
of dollars a year less than a whole life insurance policy. This
means that you can invest your money yourself instead of relying
on the insurance company to do so. Insurers are typically very
conservative when investing your money, so by taking a term life
insurance policy you are able to be a little less strict over
the type of investment you choose affording you a greater
potential to make more money.