What Are Advantages Of Term Life Insurance Policies?

There are two main types of life insurance in the market today and you can choose between whole and term life insurance. Many people prefer whole insurance, but term definitely has its advantages as well. Getting life insurance is critical to the protection of your family and your assets. At some point you will have to decide between the many options of life insurance that you have before you. So what exactly are the advantages of getting a term life insurance policy?

Cost Savings

The biggest and most obvious benefit of term life insurance is the cost. Term life insurance will always be cheaper than an equivalent whole life insurance policy. Term life insurance is only designed to protect your family against mortality. This means that if you die, they will receive the money from your policy. Term only covers a predetermined period of time. Therefore, the insurance companies can plan for the cost of the policy and charge you accordingly. With whole insurance, it lasts until you die and builds cash value. Both of these aspects help combine to cost you more money. If you are on a tight budget, you don't want to spend a big portion of your paycheck on life insurance. You want the bill to be as small as possible. For that need, term life insurance is superior to other forms of insurance.

Investment Superiority

Many investment gurus prefer term life insurance for this very reason. The theory goes that you can take the money the difference between a term and whole life insurance policy and invest the difference. During the same period of time, you can make a much bigger return on your investment. Part of the money that is spent on whole life insurance goes towards administration and other costs. Therefore, not as much of your money goes to building interest for you. You will make more money than your cash value would ever amount to in a whole life policy.

Customized Portfolio

Whole life insurance does take part of your premium and invest it in different things. They completely diversify it among several investments. The only problem with this is that you have no idea what they are investing your money in. You don't know the stocks, bonds, or anything else. Therefore, it is hard to track the performance of your investments. With term insurance, you can take the money and invest it in whatever you want. Choosing your own investments is empowering and it allows you to net a bigger return. Do you really want someone to take your money and blindly invest it in whatever they want without your approval? If you want that, you can just put your money into a mutual fund. 

Whole life insurance gives you no information about your investments. You have absolutely zero input in what is going on. If you like to be in control of your money, term life insurance is definitely better suited to you. This is great for the entrepreneurial spirit that resonates with so many people today. 

 

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