The most obvious option is to buy life insurance. There is always the dilemma of whether to get a whole or a permanent policy. There are many personal factors to consider before making such an important decision, but the former option has a number of essential benefits that you should definitely take into account. It is worth asking: why should I buy whole life insurance vs term life insurance?
The main reason why you should buy whole insurance is that it provides permanent protection for your family. You do not have to worry about the policy becoming expired. You can be certain that if the worst happens, your beneficiaries will automatically receive the funds they are entitled to.
This option is convenient as well. You can choose a whole life insurance policy that suits your budget and stick with it for the rest of your life. You do not have to shop around every time it expires. You do not have to deal with comparing quotes, reviewing agreements and consulting insurance brokers. This is certainly beneficial to all busy modern day individuals.
Why should I buy whole life insurance when the term policies have lower premiums? The answer is really simple. The former type of policy provides for the building of equity. When you pay higher premiums a part of each sum is invested in different types of financial assets. These are usually bonds and funds which provide relatively stable returns at low risk. Thus, by having a whole life insurance you build cash value. This sum can be withdrawn depending on the conditions of the policy. You can use it for anything you want - for financing your children's education, for investing in a property or for increasing your income after retirement. It is also possible for you to borrow against the equity built over the years.
It turns out that the whole term insurance policy is more cost effective in the long run than the term one. You can expect to get higher returns that the investment you have made by paying premiums. In the case of the term life insurance you will only get what you have paid for. Furthermore, if the policy expires and you are still alive, you will not get absolutely anything. There is not such risk with the whole policies.
Why should I buy whole term insurance given that there is always a risk involved in investment? Your money will be invested in low risk financial assets, but it is true that this percentage is never zero. However, you can always choose the level of risk you want to take. There are different types of whole life insurance that you can select from depending on your tolerance for risk. In this way you can guarantee your beneficiaries a set sum irrespective of the circumstances.
Whether you're buying Whole Life Insurance or buying Term Life Insurance you want to make sure you do as much research and due diligence before following through with a purchase to ensure you're happy with the end result. With so many options floating around, it can be difficult to make the right choice, but if you do enough looking around, then you're bound to make the right one!
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