Tuesday, November 8, 2011

Why is Term Life Insurance More Affordable than Whole Life Insurance?

By Dwayne Nawrocki


Whole life insurance is seen as an expense that will most likely be paid to a beneficiary at some point, and there is always the possibility that it may happen earlier rather than later. Insurance companies are run like any other business. They base their costs to customers on what their expenses are for the service they provide.

Less Exposure

Term life insurance is viewed as presenting less exposure to the insurance company because if the insured lives throughout the term, there is no benefit to be paid. Simply said, the insurance company has a much better chance of making a larger profit on term insurance as opposed to whole life.

Term life insurance is seen as a good value to the insured because the coverage amounts can be the same as with other more expensive forms of life insurance plus benefits are paid the same.

Value Accumulation

In whole life policies, the insured can actually have some accumulated value in the policy and may be able to withdraw monies from that fund. Term life insurance does not accumulate value, and when the insured stops paying the premiums or completes the term, the insurance company is under no obligation to give funds back under the standard term policy.

Most Economical Coverage

In term life insurance the simple contract insures the person for a designated number of years and ends when that time is complete. No premiums are returned to the insured, and the insurance company retains all the money paid.

A young person can get term coverage for a 10-year period can get very affordable insurance. For each block of time adding to a term policy, the rates will increase as the risk to the insurer increases.

Practical Term Policy

Return of Premium is more costly than the base term policy, but it is worth looking into because it rewards the insured with payback of premiums for surviving the policy term. If rates are attractive enough, putting money into this kind of coverage means that it is free as long as the insured lives to the end of the term.

An ideal way to save some money is by having the safety of a policy that will aid the family should the worst happen and getting the money back after the term if all goes well. Life insurance quotes continue to show their value in term policies. Plus most authorities agree that term life insurance is the best value when compared with all other life policy plan types.




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