A Life Insurance Comparison: Whole Life Insurance Versus Term Life Insurance

by Daniel Theron

What type of life insurance might fulfill your assurance needs? This article is a life insurance comparison about whole life insurance versus term life insurance.

The difference between whole life insurance and term life insurance.

Whole lifetime assurance consists of an insurance plus an investment section that stays in force until the contract is cancelled or the insured person dies.

Term living assurance covers the policyholder only for the predetermined length of the policy, e.g. 10 years. It offers no investment option.

A whole life insurance definition.

Whole lifetime cover presents death protection for the full lifetime of the insured person. It generally consists of basically two parts. The mortality charge is the primary part of the premium and it pays for the insurance coverage. The subsequent part of the premium contributes to the investment that earns interest. After the policy holder dies, the face value of the policy is paid out to the beneficiaries.

The advantages of whole life insurance.

* You can use it in your estate planning.
* A part of the life insurance premiums are invested and builds up a cash value.
* A whole life insurance policy may earn dividends.
* You may borrow money against the policy’s cash surrender value.

The disadvantages of whole life insurance?

* Insurance salespeople may tend to promote these policies because it pays a larger commission.
* Most people do not have life insurance after the age of 65.
* Whole premiums are far more costly than term life insurance premiums.
* The rate of return on a whole life insurance investment is smaller when compared to other investment opportunities.
* Policyholders cannot participate in the investment management process.
* It could take up to 10 years for a permanent lifetime policy to gain a significant cash surrender value.

A term life insurance definition.

Term lifetime assurance stays in effect for a limited period. The policy will end and the beneficiaries will receive nothing if the insured person outlives the duration of the policy. The beneficiaries will receive the death benefit if the insured person passes away within the limited period.

The advantages of term life insurance.

* Term may be used to provide cover for short-term needs.
* Term is generally cheaper than permanent lifetime assurance.
* Term may be easier to understand.

The disadvantages of term life assurance.

* It may prove to be inappropriate for long-standing needs.
* It provides only death protection.

Whole versus term life insurance premiums.

Whole lifetime assurance premiums are more costly than term premiums. The initial yearly premium is more often than not much higher for a whole life plan than for a term life plan. Term cover premiums increase as time goes by, while the premiums for whole cover stay the same for length of the policy.

When you can consider buying term life insurance.

* When you only require coverage for a particular period of time.
* When you cannot afford the cost of whole lifetime assurance.
* It may also be utilized on top of whole assurance.

When you can consider buying whole life insurance.

* You may consider buying it if you can manage to pay for the initially expensive premiums.
* When you are prepared to maintain the policy for the remainder of your life.

I can wrap up this life insurance comparison by saying that the subject of whole life insurance versus term life insurance will continue to be debated for years to come.

About the Author
Copyright 2008 - Daniel Theron. You can visit wholelifeinsuranceversustermlifeinsurance.com for more insurance related information.

Health and how to get a better deal on your Life Insurance

by Lorne S. Marr

Do you have a policy, or are you planning a life insurance? Of course you want to decrease the premium, or get more for less. Your health and other habits do change the price of your insurance. Here are some tips from a professional life insurance broker, who lives a healthy lifestyle himself.

There’s been a lot of talk recently about how insurance companies calculate risk and use factors like BMI to determine your premium. Insurance is all about managing risk and taking precautions to ensure you live longer for the benefit of all involved. So what can you do about yourself that would ensure you get a better premium?

Life insurance companies are concerned about pretty much the same things as doctors and people with healthy lifestyles: the typical and almost cliche-like definitions such as cholesterol, being overweight, tobacco use, diabetes and other serious medical conditions related to poor health or premature death. They usually ask you about your medical history and have you undergo a medical exam. Some of them might even ask for more extensive examinations, link an X-ray or EKG. Your blood and urine samples will be tested for any sign of disease, including HIV, cholesterol level, and any indications of disorders such as diabetes, kidney problems, hepatitis and other problems. The samples could be also screened for the presence of nicotine and certain medications as well as for illegal drugs.

Having that said, let’s move on and figure out where can we improve things. There are some factors that you can’t put under your control, for example age and gender. However there are other variables you CAN control and this will not only improve your health, but give you better options for optimizing your financial health and securing your families future if something happens to you.

Quit smoking. The sheer fact of smoking is responsible for a very significant raise in your premium. If you quit for one year before signing the deal and stick to it, it can lower your costs drastically. Not to mention that it could possibly save your life. Do it NOW!

Exercise regularly and lose weight. If you live healthier, the risks for the insurance company are lower. Even if you already have a policy, if you can provide your insurer with information that you’re regularly improving you health. They might decrease your premium.

However, there is a problem here with the Body Mass Index. Most insurers use as one of the factors to determine the amount of premium. As many of you have noticed, there have been talks about how these tests are unfair recently on many webblogs. If you have a lot of muscle on you, your BMI will be higher even if you’re cholesterol levels are low, you have no fat on you’re living very healthy in general. We will be publishing a special article about this issue in the near future.

Take your blood pressure medication on time. If you have problems with your blood pressure, ensure at least that you’re keeping it under control. Every small step you take makes you healthier and reduce the risk, therefore the premiums.

Tell your independent broker about your special conditions, if you have any. A good broker will know which insurance companies offer the most favorable rates for your medical condition. It is very important that you don’t lie about your health status. If the life insurance company would find this out, they might rescind your policy or deny to pay death benefit at the time of claim.

ABOUT THE AUTHOR
Lorne S. Marr, President of Lorne S. Marr Insurance Services Ltd. has been a practicing financial planner since 1993 having graduated from the University of Windsor with an MBA. In the year 2000 he completed the internationally recognized Certified Financial Planner designation. He is a recognized expert on Life Insurance in Toronto