Finance > Insurance > Why to Choose Term Life Insurance
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Article rating : 0.00, 0 votes. Author : Kinney Dancair
By far, the most efficient way to obtain life insurance is through a term life
insurance policy. Some financial advisors insist that their clients use whole life
insurance rather than term life insurance. I am going to show you why they are
wrong.
The three primary reasons they give for recommending whole life are: 1) whole life
insurance lasts the period of your entire life so you don't have to worry about
renewal or possible health downturns that could increase your life insurance rates
on term renewal; 2) whole life insurance can be used as a retirement investment; 3)
if you should decide you want to have life insurance for your surviving family, whole
life insurance will provide that extra net of security.
These reasons miss some very important facts about the whole life insurance vs. term life insurance debate. First of all, if
you are concerned about possible downturns in
your health, then you can be sure to choose a term life product that extends until
the time when you will no longer have dependents for whom to provide security. It
is not as tenuous a matter as these whole life insurance proponents would suggest.
Problem solved.
Secondly, a whole life insurance policy has a poor return on investment. If you are
interested in retirement planning, as everyone should be, then term life insurance is
the most effective type of life insurance. This is because it does not pretend to be
an investment vehicle the way that whole life insurance does. Term life insurance is
up to four times less expensive than whole life insurance. The money that you save
on the insurance premiums can then be invested in a stock or other investment that
will provide a much higher return on investment. Get a term life insurance quote
and see the truth of what I'm saying here.
As for the third reason, realistically this will not likely be an issue for most folks.
Most of us are only interested in a life insurance product that makes up for our lost
income should we die while dependents are still at home. For those few who have a
different objective, there are far better ways to purchase security for your family in
your old age. This is because the security purchased in a whole life insurance policy
comes at too high a price. If you want to make sure that your family has some form
of death insurance for you after you retire, there are cheaper ways to provide it.
At this point it should be clear that the most cost effective form of life insurance is
term life insurance. Whole life insurance just pads the premium price for the sake of
a segment of your life during which you won't be needing life insurance. On the
other hand, term life covers the period for which the life insurance product is
appropriate, while leaving savings and investments to better suited products. As if
you needed more confirmation, even the federal trades commission recommends
term life insurance as a good way to save money.
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