| If you are considering purchasing life insurance, an | | | | On the other hand, premiums for term life |
| overview of the available types should prove | | | | insurance are lower near the beginning of the |
| helpful. This article will briefly discuss the difference | | | | policy, but increase over time. Another aspect is |
| between whole and term life insurance, as well as | | | | that you can borrow against the cash value of a |
| some variations on whole life insurance. | | | | whole life insurance policy. This is not possible with |
| The easiest way to understand the difference | | | | term life insurance, since it does not have a cash |
| between whole life insurance and term life | | | | value. There are two variations of whole life |
| insurance is to look at what is meant by their | | | | insurance that need to be mentioned. The first is |
| names. When you purchase whole life insurance, | | | | a more flexible form of whole life called universal |
| you are covering your "whole" life - as long as | | | | life insurance. With universal life insurance, you can |
| you own the policy, it will pay a benefit when you | | | | adjust (within certain limits) the premiums as well |
| die. What that benefit is depends on the value of | | | | as the benefit amount over time to suit your |
| the policy at the time of your death, but you own | | | | financial situation. This is made possible by placing |
| the policy even if you are no longer making | | | | the premiums in a fund that accumulates based |
| payments on it. Whole life also accumulates a | | | | on the interest rate. As with normal whole life |
| cash value on a tax-deferred basis. In addition, | | | | insurance, this type of policy has a cash value |
| whole life can pay dividends throughout the life of | | | | that can be borrowed against. |
| the policy. | | | | The second variation on whole life insurance is |
| Term life insurance, on the other hand, is | | | | called variable life insurance. This type is similar to |
| purchased for a certain term, or period. As long | | | | universal life insurance, except that the premiums |
| as you die within that period, term life insurance | | | | in the fund are tied to the financial markets rather |
| will pay an agreed upon amount to your | | | | than to interest rates. While the potential for |
| beneficiaries. It will not pay if you cease to make | | | | growth is greater with this type of insurance, the |
| payments or if you die after the term has | | | | potential for loss is greater as well. |
| expired. In addition, term life insurance has no | | | | As you can see, there are some choices to be |
| cash value. | | | | made when considering the purchase of a life |
| Two other aspects of whole versus term life | | | | insurance policy. Now would be a good time to |
| insurance should be pointed out. The first aspect | | | | use some of the other resources at this site to |
| is that premiums for whole life insurance are | | | | help you decide on the life insurance policy that is |
| higher to begin with, but remain steady over time. | | | | right for you and your family. |