Are you a parent who is trying your best to raise your children well?
What if you are the primary income earner in your household, and you suddenly die? Who will take care of your spouse and your kids? Who will give them financial assistance? That’s why there are life insurance companies.
If you have stumbled upon this article, you may be looking for a life coverage plan. You can try to check out Life’s Great in the UK. It is a cover that pays out either to the person’s beneficiaries upon death or after a set time period.
There are two types of life coverage plans: the term and the whole life plan.
What is the difference of the two? What should your choose?
Choosing which life insurance to purchase depends on your financial needs and your beneficiaries‘. To know more, here is the difference between term life insurance and whole life insurance:
Term Life Insurance vs. Whole Life Insurance
Term life insurance provides financial protection to your beneficiaries for a certain period, while whole life coverage plan provides long-term protection and has an investment component which has cash value accumulation.
It is also called “pure life insurance” because it only gives protection to your beneficiaries upon death. If you have this kind of plan and you die within the term, your dependents will receive a pay off called death benefit.
Term policies can have a term of one to 30 years, but usually, it falls between 10 to 20 years. And if it reaches the term length, you will have your insurance renewed if you want the coverage to be extended.
The whole life insurance is a permanent insurance policy that is designed to give lifetime coverage. Whole life policies usually have higher premium payments compared to the term.
The cash value in this cover is tax-deferred. This means that while you are accumulating your gains in it, you will not be paying taxes. You can also get loans using this coverage plan. And if you don’t pay the policy loans, your death benefit will be reduced. You can also surrender the policy, and you will no longer have the insurance protection. This is also a good choice for estate planning.
Factors in Choosing Your Cover
There are some factors to consider when choosing the type of coverage plan. Some of the factors include:
- current age
- current health condition
- family financial needs
- death and funeral plans
- your children and their age
- mortgage and debts
- when you will be retiring from now
- your retirement plan
- family needs in the future e.g. college education
- if you need additional retirement savings plan
- if you will set up a trust
There are still other factors that should be considered when choosing between these life coverages. It can help to seek advice from a qualified life insurance professional to help you weigh your needs and compare which of the two would be best the best choice for you.
Ensure your life and ensure your family. Secure that your family will have financial assistance in case of emergency. Seek help for a professional to assist you with your life coverage plan needs.