If you’re not clear on the precise difference between term and whole life insurance, you have come to the right guide on insurance. I promise: by the end of this short article you will be clear.

There a few major differences, so let’s take them one at a time. Term life is insurance that you buy for a limited, defined term. This term could be as little as a year, but it’s usually between 10 and 30 years. Whole life, on the other hand is good for the whole of your life, i.e. until you pass away, or until you reach a very old age as specified in your policy, say 90 or 100 years old. So, the #1 difference between term life insurance and whole life insurance is whether there is a fixed length or term of the policy, or there is not.

The implied rule here is that you know for certain that with a whole life policy you will receive a death benefit payout, as long as you make your premium payments, unless you yourself decide to terminate the policy early, for some reason. With term life you know for sure that you will not get a payout unless you die within the term of the policy. It’s very simple, and note that it’s hardly a question of whether one type or another is ‘good life insurance’: the best policy is the one that make the most sense for you.

The next difference between whole life and term insurance? Let’s look at their investment function, or lack thereof. Term policies have no investment value. You cannot borrow against them and the payout amount is fixed from the start. With whole life, as well as other forms of permanent insurance, you can borrow against the cash value amount that has built up, at an interest rate that is probably going to be lower than credit cards and other loan sources. Now, most unbiased insurance experts at least (i.e. experts not actually engaged in trying to sell you whole life insurance!) will tell you that while whole life might be good life insurance in a generic sense it is not a great investment, but that is the subject of another post.

We just touched on the basis for a big difference between term life and whole life insurance, that of the concept of ‘cash value’. This amount builds up over time, based on interest earned by the premiums that you pay. The idea is that the cash value amount will cover the guaranteed payout that the insurance company is obliged to pay when you die. You may borrow against this amount, but be careful that you don’t overdo it as you may impact the eventual policy payout, which is the reason for buying life insurance in the first place! Also, since borrowing against the cash value is a little like paying the insurance company to borrow from yourself don’t put too much weight on this feature as a reason to buy whole life insurance. Oh yeah: term life does not have this cash value feature. Your death benefit, should your beneficiaries get it, is all that you are owed. It’s a fundamental tenet of the basics of life insurance.

Here’s a big one– the premium amounts that you pay, for a similar payout amount. As any term life insurance guide will tell you, the difference is huge. Whole life premiums are multiples of what term premiums are for the same coverage amounts. Now, although anyone would be attracted to the idea that his heirs will definitely get a payout upon his death, the high cost of whole life premiums is enough to make a smart a smart buyer think twice, and this leads us to the final, essential point:

Most people don’t buy whole life insurance. They buy term. Good life insurance for them primarily means lower payments and a clearly defined policy.

OK, whole life wouldn’t exist as a product unless it was a good idea for some. But rather than paying the sky-high whole life premiums, most folks opt for a term policy (maybe with an option to renew after the initial term finishes) and try to diligently invest money that they might have paid toward a whole life policy. In this way they will very probably have a larger nest egg when they pass away than the promised whole life payout that their sizable premiums are going toward each month. This is the most critical difference between term life insurance and whole life, and while it’s always best to get a second and third opinion on life insurance basics as you augment your knowledge with a good whole and term life insurance guide, it’s why you’ll most likely end up buying term life.

This is not rocket science – none of it is difficult conceptually, and it could be argued that some good foundational knowledge on life insurance might be worth many thousands of dollars to you over the policy you eventually purchase.

The best sources of information when it comes to life insurance would include websites like this one, that are not overly commercial or filled with ads for specific companies or types of insurance policies. A life insurance agent who’s going to actually listen to the details of your situation before attempting to route you into one type of policy or another is also invaluable. Specifically, look askance at any agent who pushes you into whole life insurance before adequately explaining variable life insurance, universal life insurance, and variable universal life insurance.

As well-meaning as friends and relatives are, is very easy for a layman to confuse the choice that was best for him with the best choice.

Term life insurance advice

Term life is the cheapest and most straightforward life insurance, with clearly defined premiums, payout amounts, and policy duration. The real downside with term life insurance is that it opens you up to the possibility of being in your 50s or 60s, after the policy is finished, without any life insurance at all. You can still get a new policy at that age, but it will be expensive, possibly prohibitively expensive. The way around this situation is to, when you take out your original term policy, make sure that it has a rider, or supplementary addition, that will enable you to either extend the policy or convert it to a whole life policy at the end of the original policy. Coverage like this, for most people, is preferable to whole insurance especially, because of the much lower premiums that you pay, more than anything else. These lower monthly premiums will hopefully leave you with some money each month towards building an investment portfolio. This nest egg in turn, after 20 or 30 years, will most likely be worth more than the death benefit payout that whole life promises you.

Whole life insurance advice

The best advice for many people regarding a whole life policy is “don’t buy it”. Whole life has a guaranteed payout, regardless of when the insured person passes away, and there is also a “cash value” amount associated with the policy, against which the policyholder may borrow. Agents will also trumpet the fact that whole life can be viewed as more than just life insurance, that it can also be viewed as an investment, or even a retirement plan.

The problem is that there are miscellaneous fees and expenses charged by the insurance company that eat into your yearly return, making it hard to justify the higher premiums that you pay in relation to the amount of your death benefit. Some people feel secure with the defined nature whole life insurance, and with the guaranteed payout. Let’s face it, if whole life didn’t make sense for at least some people out there it wouldn’t still be sold. However, in light of the alternatives you have with term or other forms of permanent insurance, declining whole life and choosing to be a little more proactive about your finances will be hugely beneficial to you in the long run.

Whole life is only one form of permanent life insurance i.e. policies that have a guaranteed payout. Other types are variable life, universal life, and variable universal. This life-insurance guide covers each of them in detail elsewhere, but the common elements that they all have relative to simple whole life is that they give you greater control over the previously-mentioned cash value amount, and flexibility as to the amount of your payout and premiums as your needs change over time. Now, they also usually involve a degree of risk that term life or whole life does not have, because you’re allowed to put a portion of your cash value amount into a wider range of investments such as the stock market, which will always involve some risk.

Life insurance advice is easier than ever to obtain via the Internet nowadays. Just make sure that the sources from which you get your information do not have commercial biases that unscrupulously attempted direct you into one form of insurance or another, without giving you all the facts.

In addition, the prices of these policies always seem extremely low. If I am in poor health, why would I give the insurance company a reason to give me a higher quote on my life insurance? It almost seems as though the insurance companies themselves could be taking a lot of risk in selling policies of this kind to thousands and thousands of people without knowing their medical condition. After all, anyone would prefer life insurance without physical exam, all else being equal, so their potential losses would be huge if the beneficiaries of their risky policies tried to collect all at once.

Well, you can be pretty sure that that is not the case, that the insurance companies are not gambling with their balance sheets. So how can they do this?

When you choose to buy life insurance with no physical, you’re essentially requesting that the insurance company look at you in the most general terms. You are telling them to categorize you in terms of average risk across the entire population, without any regard at all for your physical condition. When the company looks at your likelihood of passing away in the next year or next 20 years, in light of very specific statistics that it has for quantifying the mortality rate across the whole population, they will not give you credit for being in good health. They will simply assume that you’re in average health, and base their rate quote on average mortality risk, which naturally is higher than it is for people in excellent health.

It is easy to assume that your life insurance premiums will be higher if you take a medical exam and find that you are less than perfect health. But you still would not know just how risky of a proposition it is to insuring you, for the insurance company. Remember, we’re not comparing your condition to that of people who are in perfect health. You would be trying to establish that your condition is better than average. If you have a couple of minor health problems you may still be much more desirable as a quantifiable risk than the “average” person. Therefore the premiums you pay would still be lower.

It goes without saying that if you are in good or very good health, you will benefit if your insurer knows about it, even if they seem to really want to sell you life insurance, no physical exam required. The prospect of life insurance without physical should be looking a little less attractive by now.

A final thought: it stands to reason that the most aggressive advertising campaigns undertaken by insurance companies would be those that have the highest profit margins. Might this be a reason why advertising for “life insurance no physical” can be found on bus benches, a top taxicabs, and on direct-mail fliers that you receive every single day? If you think you’re in pretty good health, is most likely a good idea to prove that you are, then in essence force the insurance company to give you credit for it.

Getting a mortgage life insurance quote, though easy to obtain online or by calling an agent is in a way jumping the gun in your overall consideration of your life insurance needs. Ask yourself first to be a prudent move to obtain mortgage life at all. It is possible that a term life policy, which is quite inexpensive relative to the amount of coverage you are buying, might be better suited to the needs of your loved ones should you die unexpectedly. The benefit to this more holistic strategy would be that your family could determine themselves where to put the death benefit payout amount, rather than being obligated to pay off the mortgage with monies received from premiums you paid over the years.

Should you still decide that a mortgage protection insurance quote is what you are after, the best place to start is very probably online. A little bit of education will go a long way especially if you’re not conversant in life insurance topics generally. This life insurance basics guide aims to be just that sort of educational site, incidentally.

Mortgage life insurance is not to be confused with private mortgage insurance or PMI, which lenders often require that you buy. Rather, it is entirely voluntary and purchased as a way to protect your heirs by paying off their mortgage with a tax-free benefit, and not the company that granted you a mortgage. It is possible to include supplements to this policy that will give you and your family funds immediately if you should be stricken with a critical illness, or become terminally ill.

All the terminology may be confusing when it comes to insurance-life, mortgage, online quote-at the end of the day having a good insurance agent to consult with face-to-face is really necessary to determine what kind of insurance is right for you. Ask around to friends or relatives who might be able to suggest a trustworthy agent. Here she will be able to augment basic education you should have gotten online, and be able to tell you what is best for your own situation.

Just remember that if you decide against term life, that a mortgage insurance quote will not take into account the overall financial needs of your family should you pass away, and you have to have a plan to address these additional financial obligations that they will have.

In a debate of term life insurance vs. whole life insurance it would be unfair to call any better than the other because both of them have their objectives, which they serve perfectly.

Term life insurance provides death benefits and usually ranges from 10 to 30 years. If you live past the term, you get no money back. Term life insurance is generally cheaper than whole life insurance. Whole life insurance builds a savings account along with the risk coverage it offers. Therefore, the benefits are available as long as the premiums are paid. If you do not die, then you can cash in on the policy or borrow against it. However, the premiums are definitely higher.

There is a big debate over term life insurance versus whole life insurance most of the time. A major difference between whole vs. term life insurance is that the premiums for terms life stay the same while premiums for whole life insurance might vary over the life of the policy.

Generally younger people are advised to invest in term life insurance because it is cheaper while the difference between its premium and whole life insurance premium can be invested elsewhere. The younger population is not going to reap benefit of the whole life insurance in near future, say 20 to 30 years. However, when the term life insurance expires, its owner grows in age and deteriorates in health, thus making it even costlier to buy a life insurance again.

A combination of whole term life insurance policies could be the answer. Consult first with an insurance professional, and ask his opinion of getting a small whole life insurance policy along with a term life insurance policy. Life insurance by its very nature is not a simple product because its premiums, interests, depends on a lot of uncertain factors like market, your health, age, insurance company and much more. Thus you have to decide for yourself from the two by assessing your future needs, risks involved and present financial position.

Another type of life insurance settlements exist as a way for policyholders to sell a life insurance policy that they possess to an institutional funder of one sort or another-a third-party who agrees to buy the policy for more than its cash surrender value. Life settlements of this kind are basically a way for a policy holder to terminate a policy early for any number of reasons, but often centering around the cost of maintaining the policy. Often policyholders needs change as they get older. If their assets depreciate by a large enough amount it no longer makes sense to pay policy premiums to maintain the level of coverage that was appropriate decades earlier. Also, as incomes decline in our later years we may be unwilling or unable to to pay premiums that might very well be increasing as we reach our 70s and 80s.

In these cases, it might behoove a policy holder to find an expert in life settlements to help them negotiate with institutional funders in an effort to get a good price for the policy in question. In the best case scenario it might be possible to put the money into a new policy or policies more appropriate to policyholder’s current situation. If done correctly there can be a significant amount of cash left over after the transaction.

Regardless of which type of insurance settlement questions brought you to this article, seeking out professional help is a very good idea, as always. But one things for sure. As you enter your 70s or your 80s your needs do change, and if your situation is complicated or if you have a high net worth it’s probably a good idea to at least get a free consultation with a life insurance professional to reassess your needs.

Have you ever wondered why there are so many advertisements for life insurance of the type that promise to guarantee you a policy? Where are the ads encouraging you to get life insurance that would require that you take a medical exam as a condition of being granted a policy? Is it possible that insurance companies would rather sell you a guaranteed life insurance policy?

Yes it is possible, and in this brief article I will explain why you have to pay more for this guarantee. I will also tell you why applying for life insurance with no guarantee of being insured, that also involves the hassle of a medical checkup, might actually be the better route to take.

Life insurance companies have very sophisticated methods to determine how much risk they are undertaking when they sell you a policy. The more information they have, the better they can quantify their risk. If you are in poor health and the insurance company knows about it, you may still be able to find life insurance coverage, though naturally it will cost you more. But what if you’re in average or even above average health? Unless this is documented by a complete physical, the company has no way of essentially giving you credit for it and is forced to keep you in the “unknown” category. Note that it really cannot even be assumed that you are in average health in this case, because without a physical there is no way to make any assumptions about your health at all.

You can be sure that an insurance company that offers you a guaranteed acceptance term life insurance will cover themselves against the possibility that you have unknown health problems. This is the reason why the “guarantee” portion of the policy will make it more expensive to you then similar coverage for which you agree to undergo a medical exam. They know how attractive and convenient guarantee issue life insurance sounds to you, hence the aggressive advertisements, but as with so many products that offer convenience, you run the risk of overpaying for the feature. Remember that this is not lunch-at-a-drive-through-restaurant convenience. This is convenience that you might pay for for 20 or 30 years. It might be one of those times that you should accept a couple of hours of inconvenience.

So what if your medical exam reveals that you are in less than perfect health? There is of course a chance that you might have a previously undiagnosed condition that renders you uninsurable. Barring that, even with minor ailments you might be surprised to learn that your premium payments might still be lower than if you had gone for the guaranteed issue life insurance. After all, the point here was to give the insurance company an objective indication as to your health, not necessarily to prove that you have no health problems at all, though of course that’s the best case scenario. Giving them a medical basis for ruling out the presence of ailments that make it statistically much more likely that you will pass away during the term of your policy, should definitely result in lower premiums for you, with a NON-guaranteed life insurance policy. And by the way, you might be in better condition than you think.

Guaranteed acceptance life insurance sounds great until you consider just how much more you will spend to save a little time. Over the long run, is it really worth it?

You have probably wondered what a so-called guaranteed life insurance policy is. It sounds like a way to be sure that you won’t be turned down when you apply for life insurance, and that is exactly what it is. Maybe you are a little skeptical because insurance companies advertise this guaranteed life insurance so aggressively. Well you should be skeptical. In this short article I will outline exactly why guaranteed insurance might not be the best way to go.

“Guaranteed” implies that there are no conditions getting insured. Clearly the condition that you as the customer would like to circumvent in this case is getting life insurance without having to go through a medical exam. But what will you have to pay for that privilege?

The insurance company has to charge you more for guaranteed acceptance life insurance because of the increased risk they are assuming, because your health is a total unknown to them. They have nothing to gauge their risk except the likelihood of the “average” person passing away during the term of policy they will sell you, if guaranteed term life insurance is when you are selecting. Obviously the category of “average” includes people who are in poor health. You will get your guaranteed issue life insurance but your premium payments will be high enough to cover the risk that the insurance company is taking in case you are unfortunately one of those people who are in below average health.

This may be a reasonable trade-off if your aren’t in the best shape, but the take-away from this article should be the following: even if you have a minor health condition or two, you may still be better off in taking a deep breath and getting the medical exam. If you can prove to the insurance company that you have no ailments that put you squarely in the “below average” health category, you can look forward to the prospect of lower life insurance premiums for years and possibly even decades.

And what if you are in good or even excellent health? In this case, for similar coverage your premium payments should definitely be lower than if you had not taken a medical exam. Guaranteed life insurance may be very tempting to you, but the prospect of paying lower premiums-over many years-should have you giving at least serious consideration to taking a medical exam before you purchase term life insurance. At the very least, don’t go “guaranteed” because the exam seems like to much trouble. The potential savings make it worthwhile.

The problem with term is that you risk paying premiums, low though they are, for many years or even decades, without receiving a death benefit payout. Of course surviving the period of your term policy is good news for you but it’s also very good news for the insurance company to which has received all those payments, plus interest with no payout obligation in the end.

This is not to say that some form of permanent life insurance is the way to go. Most experts advise avoiding the high premiums of whole life insurance and the supposed investment vehicle that it represents. Instead find a low cost term life insurance rate and invest any extra money that you have each month in a well-chosen portfolio of investments.

When you’re surfing the Internet for low cost term life insurance quotes keep in mind that you will probably want life insurance for your entire life, and not just for the length of the policy you’re considering buying. Has it occurred to you that you risk being entirely without life insurance your 50s or 60s if you go the term life insurance route? Assuming you survive the initial policy, which is statistically quite likely, you could find yourself going to insurance companies as a much older individual, possibly with health problems. You may still be able to find term life insurance for yourself at that age or you may have few other options than a more expensive whole life permanent policy.

There are ways to get around this dilemma however. Even if you’re shopping for low cost term life insurance online you should be given an option to add a so-called extendibility rider, or supplement, to the policy that will leave no gaps in coverage. Another option is to buy a term policy with a convertibility feature that will enable you to continue your coverage as a permanent policy at that time. The premiums will most likely increase of you will have no lapse in coverage.

The bottom line is that getting a low cost term life insurance quote is only part of the challenge you face when you’re trying to determine the best coverage for you and your beneficiaries. Even though it’s usually the best policy for most people, consider your other options, and be aware of ways you can customize your policy to best suit you.

What Are The Fees

With life insurance the fees can vary greatly from one policy to the next.  For example when looking at a term life vs whole life insurance policies, term policies will hold the same cost of insurance through out the entire period of the policy but when you go to renew the policy the cost will usually increase depending your age and health.

On the other hand whole life insurance, also known as permanent life insurance will change from year to year.  However as the cash value builds inside of these policies the cost of insurance will usually go down.  For example, if you have a $100,000 policy and have $75,000 in the cash value you are only paying for $25,000 of insurance.

You will also what to be aware of certain types of life insurance, especially when you get a high risk life insurance quote.  A lot of times the internal fees will be a lot higher than if you would have gotten a normal term policy.

How Is The Cash Value Illustrated

Another thing you need to pay attention to is the cash value and the interest rate they apply to it.  For the most part fixed life insurance policies like whole life and indexed universal life insurance will never have excessive interest rates.

However, with variable universal life insurance the interest rate can be changed to as high as 12% rate of return.  If you see these kinds of rates or higher in the illustration it should throw up red flag.   In fact ever illustration you look at that contains a cash value are required to show a 0% rate of return illustration.

What Kind Of Riders Are Their

It also makes a big deal as to what kind of riders you add on a policy.  For example if you were to have a permanent life insurance policy with a base amount of $300,000 for a death benefit the cost of insurance would be a lot more.

However if you would have gotten only a $100,000 in base coverage and added a $200,000 term rider onto the policy your cost would have been cut down dramatically.

The Next Step

Now that you know what to look for are you ready to take the next step?  If so before you make any hast decisions make sure you get several quotes from respectable life insurance agents.  You never know who might have the best deal.