Term and Whole Life Insurance, The Difference

As I stated in the previous post, entertainment has become so much a central part of our lives, sometimes we forget to take care of the most important things that seem so trivial until a situation comes up, thought I'd share some things today, so we all can bring them forward to 2010 with us.

One of the biggest issues in our communities is health care. There are a large number of people without it, and even if they do have it, it may not cover all of the things needed to insure they remain healthy.

Another pressing issue is life insurance. I have seen so many families devastated to lose a loved one, only to find out that they never had life insurance, and the family is left scrambling to try and come up with the cash to have a dignified and respectable service for their loved one.

I'm not an insurance salesman, but I took a class early in life while in the Marines that taught me about the differences and how so many people get swindled each year, paying into an insurance policy that never matures, and expires even before they are dead, and once again, they are without that precious life insurance.

Below you can find an explanation of the big differences below, and although I know that there are some geniuses in this group, there may be at least one that may not know. That is all we need to do, is reach one person to affect change in our community. Lack of knowledge is a precursor to all things not good.

I have to point out what I first read when I found this group, and one of the house rules, #10:

Let us see how far we can travel on this road called life, how high we can soar amidst our daily strife.

Can we make a difference in one another's world, maybe with just a simple word of wisdom, usually a gem of a pearl?

I have this vision but it must begin with one who will take the hands of a few and so on and so forth. My only hope is that others see the same thing too.

10. Inspire, Encourage, Love one another!


Let's relate, actuate, educate, motivate, accumulate (knowledge), and not alienate.....



Overview
Life insurance is one of those reluctant necessities. No one really likes to think about it because it makes you confront your mortality, but you have to think about it to protect your family. The two main life insurance types are term life and whole life. Both provide coverage so your family will not be thrown into a financial whirlwind should you pass away, but their range of benefits strike a sharp contrast from one another.

Time Frame
Whole life insurance provides coverage for your entire life so long as you continue to pay the premiums. Term life has a set expiration date, whether you've died or not. Term life insurance can be bought for periods of five, 10, 20 and 30 years, and provides coverage to your family for that set expanse of time.

Cost Difference
Whole life insurance costs more than term life because you don't only pay into the policy, you're also paying into an investment fund. For many, term life is the more affordable way to go, providing you with coverage while you enter into your own investments and cash-building efforts.

Coverage
Term life and whole life insurance policies will pay out the policy amount to your family should you die while the policy is active. But term life policies have a pre-determined end date, so if it expires before you die, you'll likely lose out on your premiums and will no longer be covered. Whole life policies cover you for your entire life, expiring on the date of your death.

Investment
Whole life insurance policies include an investment portion. Your money is split between the policy and an investment fund, which allows you to build interest and cash value while the policy remains active. You can even use this money at a later date to help pay for your child's education, home repairs or emergencies. Term life doesn't offer an investment option.

Premiums
Term life premiums are very inexpensive because all you're paying for is the policy. Whole life premiums include your standard policy coverage as well as commissions, annual fees, sales charges and investing. This makes the premiums on whole life policies considerably more expensive and more geared toward the investor than just a person looking for simple coverage