Term Life Insurance Policies – Why You Should Prefer Them

2007-03-08 10:33:40

( Insurance )



Life insurance planning is the most crucial part of every successful financial plan. The primary objective of buying a life policy is to protect your heirs from financial distress after your death. Its essence is to provide a support for your heirs by protecting the assets that you acquire while you are still alive and to help them attain important financial targets even after you die.

If you still are young and have loved-ones who depend on you for financial support, the life policy that you can certainly afford is term life policy. This is the biggest advantage of term life insurance policies, that is, the cost. Term life policy is the most economical way of buying a large amount of life insurance protection over a given more or less short period. A family with young children can avail any of the term life insurance policies until the children leave the home to go on their own.

Most insurance agents would often convince you to buy a whole life policy. Sometimes, they don’t even mention anything about the term life policy. The reason for this is simple: these agents earn more if you buy a whole life policy through them.

Whole life insurance policies are expensive. The premiums in the early years of these policies are higher than those of term life insurance policies. Whole life insurance policies are purchased by those who can afford them with the intent of keeping the insurance protection throughout their life or until their retirement. Unlike the term life insurance policies, holders of whole life insurance policies build up equity in the policy, that is, if they decide to terminate their policies they will receive the cash surrender value.

Although this cash surrender value is not present in term life insurance policies, you can actually use the money intended to buy any of those whole life insurance policies into high yielding investments. You don’t have to wait that long before you can enjoy the earnings that you get out of these investments. With term life policy, your heirs are still protected anyway.


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