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The most popular type of life insurance is, without
a doubt, term life insurance. This kind of policy
will be set out to last for a specified ‘term’
– i.e. it will last for a set time period. So,
you can take out a life insurance term policy for
25 years, as an example. During this 25 year period
you will make your policy payments and you’ll
have the protection of the policy if you die. So,
your next of kin can claim against the policy in the
event of your death. But, at the end of the 25 years
your policy will be finished and you’ll get no
further protection from it.
Many
people opt to take out a term life insurance policy
because they know that they will no longer have a
great need for insurance at the end of the specific
term. For many people this kind of policy will end
at around the time that they retire so their mortgage
will probably be repaid, their families will be grown
and they won’t need to make provision for their
family to have such a large lump sum or income if
they die. So, a term policy can suit them very well
indeed, giving them cover during the years when they
really need it and finishing when they don’t.
A
whole of life policy, on the other hand, will suit
those of us who want protection for the rest of our
days. This kind of life insurance is designed to last
until you die – so you’ll be covered in
the short, medium and long term. A lot of people who
opt for this kind of life insurance do so because
it can be set up to help with issues such as inheritance
planning, although many people simply prefer to get
cover that is guaranteed to make a payment at some
point so that they feel that they are getting some
return on their policy payments. There is a guarantee
of payment with a whole of life policy that isn’t
there with a term policy. Once your term policy is
finished that really is it – you are only guaranteed
a payment if you do die while the policy is in force.
Many
people make their choice here based on their budget.
The fact that a term life insurance policy may not
ever make a payment (i.e. the fact that you will probably
survive your policy) means that insurers can offer
lower costs. A whole of life policy – with its
guaranteed payment at some point – is consequently
more expensive. The choice you make here will be a
personal one and may well depend on your financial
circumstances. The vital thing to remember is that
some form of life insurance cover is vital for most
of us – especially if we have a family to consider
and we can consequently get great protection from
either kind of policy at the end of the day. by: Micheal
Reese
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