One of the very first decisions you must make when arranging life insurance is what type of policy should you choose - term insurance or whole life. Consider the following checklist to see which type might suit you best:
Reasons For Choosing Term Cover
1. Budget for premiums. If your budget for premiums is small, you will probably need to opt for term insurance as the premiums for similar amounts of cover are much lower.
2. Amount of cover. Similar to the above point, if you require a large amount of cover (perhaps because of dependant children) then you will probably need to take advantage of the lower premium levels.
3. Age. If you are young, you will find that the premiums for term cover are very low. It might be possible to arrange term insurance for the whole time that you require life insurance for (e.g. the time during which you have dependant children in education).
4. Investments. If you take care of your investment needs by investing in the stock market or other forms of saving/investment then you will probably have no need for a life insurance policy with an investment component.
Reasons for Choosing Whole Life Cover
1. Insurance period. If you can see that you will require cover for an extended period then whole of life cover can be a better solution. This will avoid the possibility of a health problem dramatically increasing your premiums or rendering you unable to get insurance.
2. Investment choices. If you want the simplicity of having both your insurance and a substantial part of your investment in the same policy then whole life is best for you. Once the policy has built up an investment value (in its later years) you can even borrow against its value, therefore meaning that you don’t have to die to benefit from your policy.
Tags: Life Insurance, term life insurance, whole life insurance
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