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When Should You Choose Term Insurance Instead of Whole Life
Insurance?
by: Ethan Lewis
"Different strokes for different folks."
When it comes to life insurance, it's important that you keep that saying
in mind.
Most people are familiar with "whole" life insurance. This is the kind of
insurance where you will get back a certain amount of money when it "matures" at
the end of the insured period.
What you may not know is that there is another
form of life insurance called "term" life
insurance.
Similar to whole life insurance, when you
get a term life policy, you pay a sum of money (the "premium") to the insurance
company, and in exchange the company promises to pay out a certain amount of
money should you die during the period for which you are covered under the policy.
In other words, you are buying insurance coverage for a certain period of
time.
But unlike whole life insurance, you will not get back any money at the end
of the insured period when you buy term insurance.
You may be saying to yourself, "But won't
I be throwing money down the drain? After all, I won't get back a single penny
after the insured period!"
Hey, I understand how you feel. But rest assured that term insurance is still
a very idea, and I highly recommend that you use it to your advantage.
So, why should you still consider term insurance?
Well, one advantage of term insurance is that it's cheap. In fact, for the
same amount of insurance coverage, the premium for a term policy is only a small
fraction of the whole life policy's premium.
And this is why term policies are a great way for you to make sure you are
sufficiently covered. If you've never checked out the premiums of a term life
insurance, I highly suggest that you go do it soon. You'll be surprised at how
cheap it is to bump up the insurance coverage for yourself!
Plus, you can use the money you save from
the lower premiums to invest in some other areas that can potentially generate
higher returns for you. This strategy is generally known as "buy term and invest the difference",
and it's something I recommend that you take into consideration as you do your
financial planning.
Copyright 2006 Ethan Lewis
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About The Author
Ethan Lewis is the owner of the "Cheap Term Life Insurance" site. Find cheap
term life insurance and all sorts of other relevant tips and advice at http://www.cheap-termlifeinsurance.com
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This article was posted on March 24, 2006
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