If you are in your 20s or 30s and considering buying life insurance you might be tempted by the lower premiums that term insurance offers. Before you decide on the type of policy that is best for you consider the following 3 reasons why you might be better off with whole life.
1. Lowering Overall Cost
This might seem like a strange one, given that I said in the introduction that term premiums are lower. However if you consider the cost over your entire lifetime then whole life will often be less. This is because the premiums will often rise dramatically at the end of a term policy whereas a whole life policy with guaranteed premiums will never increase.
2. Preventing Loss of Cover
Your initial premium might be low, but if you suffer a health emergency then you may find that your premiums are increased beyond the amount that you can afford when your initial term is over. In this instance you might even find yourself denied cover or unable to afford enough to cover your families needs.
3 Building an Investment
Part of your premium will be invested, as the company managing your policy have to build up a sum to eventually pay out. In the later years of the policy this can give you some flexibility as you could convert part of it to a standard endowment (if you decide you don’t need so much cover) or borrow against its value.
Conclusion
Your choice of policy will depend on your own unique circumstances, but don’t dismiss whole life cover just because the initial premiums are higher – the decision you need to make is far more complex than that!
Tags: Life Insurance, term life insurance, whole life insurance
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