Life insurance is worth to consider for sure. But you need to know that it will lead you to two different types of it. The types are such as the whole life and the term. Through this article, I will show you the objective as well as the pros and cons of this type of insurance policy.
When you need the life insurance?
I will say that life insurance is the suitable for you who have family especially kids. The main purpose of this insurance policy is replacing your income and giving it to the people that depend on you financially after your death. But well, there are a few cases that show even if young yet single person may need this insurance policy. And of course the insurance agent will sell it to you anyway.
The most possible reason of why young and single people may need life insurance is if they are graduated with huge debts of student loan and the debt is cosigned by your parents. You should keep in mind that you will need this insurance policy if your debt is cosigned. Anyway, your parents will not be legally responsible for your debt if the loan is only signed by you and then you are dead.
What is the whole life insurance?
I will also say that sometimes the insurance world is simply confusing. Basically, there are two main types of life insurance. They are such as Term Life Insurance and Permanent Life Insurance.
The first type is the insurance that will require you to pay the premiums in specified term like 20 or 30 years. Then if you die during the term, the insurer will pay the heirs with the benefit. But this insurance policy will be like the car insurance: if you stop paying then you will lose it.
The second type will be lasted as long as you pay the premium. Other than that, some of the money you paid for the premium will be accumulated as the cash values. You can definitely use it for the retirement savings or for taking the loans during your life.
Well, there is one big difference between whole life insurance and universal life insurance. The firs one gives the fixed premiums. Meanwhile, the second type will allow you to set the premiums as well as the death benefits. Still, before finally buying one of them, it will be better if you consult to the financial advisor first.
Related Article : Life Insurance Advice: Do You Need Life Insurance?
The pros and cons of whole life insurance
The pros are such as:
- It is guaranteed of investment return even though the amount is modest
- The premiums are fixed
- In the end you will have the cash value that can be borrowed or withdraw the cash before your death
The cons are such as:
- The investment return is mediocre though
- The premiums are fairly expensive
- The commissions and fees are high enough for insurance industry
- Other than that, it can be complicated yet difficult to understand this type of life insurance
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