Everyone knows they need insurance. You get the letters in the mail all the time for x amount of dollars you can have x amount of term or whole life insurance. Do you know the difference in the two?
Term life insurance is the most common insurance that you hear about. Term life insurance is set up to be paid in monthly payments. At different intervals in your age the cost of your policy will go up. Generally you receive a chart that explains how much your rate will increase and at what age. At some point in your coverage you will have the option to drop your coverage or continue to pay higher increasing premiums. Term life insurance has no cash value and no interest collected on the policy. The policy is only good if the individual who has the policy dies. The policy will then pay the beneficiary the amount of insurance the policy covers.
Whole life insurance on the other hand is a policy that once purchased stays with the individual for their whole life. The cost to have the insurance does not go up in most cases as long as the claim is paid up and not let slip. These policies are generally paid every year. Many of these insurances will collect cash value and can be cashed out for cash value at certain age groups. If of course you cash out your policy you also cash out your benefits. You may then not be able to lock in your rates with another whole life policy being these are the fewer policies you are ever offered. If you do find another whole life policy your price to take new coverage will not be as cheap being it is based upon your age at the time you take the policy. Many companies today allow for parents or grand parents to buy whole life policies for their children or grand children. The rates are locked in as long as the policy is maintained in good standing and may be cashed out often at the age of 21.
Of the two policies whole life is the best bet if you are young. Your premiums will be low and will last a life time. If however you are middle aged or older you may want to look into term life insurance. Despite the increasing premium you may be able to get this insurance cheaper than whole life at this time. Life insurance like any other insurance is costly but something that everyone needs. Some insurances you buy and never use but life insurance is one you can bet if you keep it one day you are going to use. The prices of funerals are not getting any cheaper and life insurance is really something that you can not afford to be without.