If you take whole life vs term insurance, the term life looks to be much better option. Agreed:
• Term life is sold only for a limited term; but this is not really a disadvantage. In spite of what the propagators of the whole life policies say, nobody needs the coverage for his entire life. Know that, you need the coverage only as long as you have an income to replace and an insurable interest to protect.
• Term life does not offer any cash value accretion and so if you outlive the term, you cannot claim any return. However, the whole life policies offer such an advantage only because you pay for it. Term life charges only for the cost of insurance and so they provide only the insurance benefit.
Therefore, if you are looking for insurance protection, avail low cost term life insurance. Only take pains to determine the term duration correctly. Such policies are generally sold for 10/15/20/25/30 years. If you are financially competent, thirty year term period is enough to take care of all your insurance needs, but if your need is for shorter term, you must take advantage of the fact and save more money. You see, the policy price depends upon the length of the term as well.
How do you calculate such a term? Calculating the coverage amount is easy. You can find calculators posted online for such an operation. All you need to do is: put in the required data and hit the submit button; within minutes, you will know how much money your beneficiary will require at the outcome of the policy for leading a decent lifestyle. Easier way is to use the thumb rule and multiply your annual income before tax by ten or fifteen (depending on your standard of living) to obtain the required amount.
Your lifestyle and the family’s aspirations are two important factors that decide the coverage amount. Other than these two, factors such as your average yearly income, average expenditure, assets as well as your liabilities also need to be considered. It is indeed, important to calculate the amount carefully. Larger the face value greater the rates. But if it is too small, your beneficiary may have a struggling life ahead.
However, no such tool is available for calculating the coverage term; nonetheless, the job is equally important. Although online life expectancy tool can give you an idea, it is far better to depend on factors such as your present age, your retirement age, how long before your children become independent or your mortgages and loans are met. Your savings too should play an important part in deciding the required term; you do not need any coverage once you have made enough assets for self-insurance.
As already mentioned, the coverage amount and the coverage term are two important determinants as far as the policy price is concerned. You need to determine them before you can request for term life insurance quotes. Longer-term period will unnecessarily increase the price structure and too short a period may leave your family vulnerable. Trying to buy fresh coverage later in life may become much too expensive, if not impossible. You see, life insurance rates also increase with age and deteriorating health condition that advanced age naturally brings along.
Another important factor to remember is that not every term life is low cost. If indeed, you are looking for low cost term life insurance policy, make sure it is a fully underwritten policy. Such policies always make you undergo medical test and take four to six weeks to complete the underwriting process. The no medical life insurance policies, which provide the coverage within 24 hours, are also term life, but they are very expensive, especially for healthy and tobacco less people. That is because, under this policy, the risk of insurance is greater for the carriers; they need to extend the coverage without any detailed scrutiny.
Then again, if you are ready to pay even more, you can also find these policies under whole life category. Unlike the term life no exam policies, these whole life policies exempt you even from answering health questions and guarantee the coverage. On the con side, while the term life policies can have comparatively larger coverage amount, under whole life policies, this amount is limited to $2500. Moreover, if you qualify, the term life no medical exam policies provide the coverage for the full amount from the next day, but the whole life graded policies provide the full coverage only after two years. Therefore, even if you are going for a no medical policy, it is important first to take the whole life vs term insurance and then decide.
Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on life term life insurance and instant life insurance, visit his site today.
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