The Importance Of Having Term Life Insurance - By: Vivian Smith

You have decided to purchase life insurance. Now it is time to pick what type. The answer is simple: TERM LIFE.

There are two different types of life insurance, whole life and term. Whole life insurance is an insurance policy and an investment. The investment can be stocks, bonds or money market accounts and can gain cash value that can be borrowed against; HOWEVER, the savings are limited and the investment fees and commissions are high. In most cases, the up-front fees cost about the same price as one-year premium. You may hear insurance agents describe whole life as a good investment tool, but it really is only a glorified savings account. Term life is ONLY a life insurance policy.

When picking life insurance, the best thing to do is make it simple; leave life insurance and investments as separate financial decisions. Unlike whole life, term life policies are straightforward policies that pay the same death benefits from day one to the maturity of the policy. Since they are simple straightforward plans, term life insurance offers competitive pricing and flexibility.

Competitive pricing means cheap. You are not paying for the investment portion, which includes fees and commissions, of the whole life insurance plan. All you pay is the same monthly premium from day one to the end of your term, for LIFE INSURANCE only. Since term life is so simple and policies are easily comparable to the consumer, the market has become very competitive; therefore causing rates to go even lower.

With a term life plan, most people have flexible options, which can create more savings. Many term life policies are renewable. This means you may be able to renew your policy at the end of the term without getting a new medical exam. Other policies are convertible, which means they can be changed to an equivalent cash value policy if it makes sense later down the road.

Common sense says that life insurance policies are not about making a few dollars. It is about protecting your family, in the unfortunate event of your death. When a loved one dies, the family is stuck with numerous financial obligations. Besides the funeral and burial costs, there are credit card bills, auto loan bills, mortgage payments, estate tax payments and every other financial obligation that you occur during your life. Also if you were working, your family loses your income and that will increase the financial burden on the family. If you have children, you need to think about their college education. Having a term life policy, with a specific death benefit amount, will help alleviate the financial burden placed on your loved ones. TERM LIFE PROTECTS YOUR FAMILY.

There are two different types of life insurance, whole life and term. Whole life insurance is an insurance policy and an investment.

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