Which is better, Whole Life Assurance, or Term Life Assurance?
The best palce to start would be simple definitions of each:
According to this site:
Term life insurance is basically insurance that pays the face value of the policy to the beneficiary when the insured dies. Term insurance can be for a set amount of years (up to 30). When you die your family receives the face value of the policy.
Whole life insurance involves investments that can increase in cash value. Some people borrow against their whole life insurance policy. When you die, your family also receives the face value of the policy, not the money earned. Term life insurance premiums are typically much lower than whole life premiums.
So which one is better? To answer this question you need to think about what your goals are.
If your primary goal is to cover your fueral costs in the event of your death, a small amount of term life insurance might be the right bet.
Term life might be a good bet if you are the primary money earner in your house and you are in you high income years and want to make sure you family would be ok in the case of your death. In this case, you may want to cover yourself for a higher amount during a shorter period of time to be safe.
Whole life insurance is typically more expensive, but can have both a life insurance componant and an investment component. Your policy will have a face value plus dividends and incremental life insurance purchased by these dividends in th case of your death. These whole life insurance poliies also become an asset because they have a surrender value, the amount you could cash in the policy for today, typically calculated based on the dividends from the policy and the initial investment made in the policy.
Whole life assuance polcies might be a good investment vehcile, but you should check with your financial and tax advisors to make sure that this is the best investment for your situation.
You may want to consider a whole life assuance polocy for your children. These policies can often be setup with an intial investment that can earn dividents and also automatically pay for the annual premiums, so that your children won't have to worry about them. This can be especially good in situations where your kids get sick later in life and wouldn't be able to purchase whole or term life insurance on their own.
The following site also does a good job of reviewing some of the options:
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