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Saturday, April 27, 2013

When is whole life insurance better than term life insurance

Estate and retirement planning is facilitated with whole life insurance policies
Whole life insurance allows policies to build cash value
By Alisia Goodwin

Having a life insurance is important if a person wants to ensure that his family will have financial security after his death. But then people often get confused if they should opt for term life insurance or a permanent life insurance. There is a notion that buying a term insurance is best option. However, it might not be true for everyone. Even a whole life policy can prove to be beneficial.

Right time to buy

Best time to buy a permanent life insurance is when a person is young and has few responsibilities. This will help him prepare for the future in an appropriate manner.

When a person starts with the policy early, he can maximize the benefits. A person must buy insurance as soon as he begins with his job. This will help him prepare for the future in a better way because companies consider age and occupation as an important factor for calculating premiums. They believe that with age people become prone to diseases and therefore, they need to pay more to have desired coverage.

Also, companies conduct medical examinations before finalizing the policy. If a person has a disease, he will have to pay higher premiums. Thus, starting at a younger age with fewer chances of diseases saves money. Once the insurance is bought, there will be no effect on premiums.

Regular level premiums

When a person buys the insurance he is aware that he will have to pay premiums till the time he is alive. The best part of this insurance is that rates do not change. It is known that in term life insurance premiums increase with renewals and time duration. When a person calculates the premiums in both the policies for the long run, he will find that the cost of having a whole life policy is less expensive.

Sufficient coverage

Since the company takes higher premiums, it also promises higher death benefits. For those who know that their family needs support which cannot be fulfilled by buying a term life insurance, can buy a permanent life insurance.

Valid for lifetime

Unlike term life insurance, a whole life type does not expire eliminating fear of staying uninsured at any point and time in life. There is no need to remember the expiry dates and request companies to renew the policy. Once a person buys it, he owns it forever. This guarantees that security and financial stability for the family is always available.

The cash value

The unique feature of the insurance is that it accumulates cash value. This means that it also serves as an investment. With time, the interest can be used to pay the premiums of the policy. Thus, if a person opts for permanent life insurance at right time, when he becomes old, he will not pay premiums from his pocket. Also, a person can take a loan against his permanent life insurance. Whenever the insured person needs funds for any activity he does not need to take an additional loan from another company.

To get more information about wholelife insurance, you can go online and find the best quotes which guarantee adequate security for the family.

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