Do People Really Need Life Insurance?
Are you considering buying life insurance? Is life insurance an optional purchase?
Some might say that life insurance is not a necessary purchase; others say that they couldn't live without it.
If you are a single person that does not have children, then maybe all you really need is to cover final expenses. But if you are a person that is married and has children, then life insurance is truly indispensable.
Life insurance is needed for a variety of reasons. People need it to protect the future and lifestyle of loved ones, to make sure children get a college education, to supplement a spouse’s income If you still think you don't need life insurance then you may be the only one. Reports by the American Council of Life Insurance state that Americans spend over $215 billion a year in life insurance premiums.
Since we have determined that life insurance is a necessity for most people. Now let’s define the different types of life insurance there are. Basically there are two types of life insurance. Of course there are variations on those two types, but for the sake of this article lets say there are two types; term and Whole life insurance policies.
Differences between Term and Whole Life, Life Insurance.
Term and whole life, life insurance policies are similar to leasing or buying a car, or buying, or renting a house.
If you lease a car you have full use of the vehicle for as long as pay the lease amount. But you can't sell a leased vehicle. You turn it in and that’s that. You buy something else or you lease another vehicle. You don’t get any money back. Term life insurance is similar to this. You pay your monthly premiums, you never get cash back, loan value, or sellability of the policy and your premiums can increase over time.
Whole life policies are similar to buying a car or a piece of property, as in they become an asset. Eventually they build up some capital that can be cashed in on, loaned on, or used in a life settlement transaction, etc.
Which is Best Whole Life or Term Life Insurance?
That is a difficult question and you will get different answers from different financial advisors. Term life insurance tends to be a lot less expensive but you don’t build up any capital, although many financial planners say there are better ways to build capital. Whole life, life insurance policies are an investment, but you can’t cash in on that investment for a good 15 years. So that the decision on which type of life insurance to buy really depends on you the consumer.