How to Select a Life Insurance Product

Term Life Insurance vs. Whole Life Insurance

There are many different forms of term life insurance and whole life insurance available.

Find out what is the best life insurance product for your needs.

There are several life insurance products available so making the right choice from the outset is fundamentally important. Given that it isn't possible to predict the future, term life insurance vs. whole life insurance is one of the most important decisions a family will make. Whilst there are two main types of mortality coverage, there are a number of subtle variations of these policy types.

Level Term Life Insurance

Term coverage is an affordable alternative to whole life insurance for those working with a limited budget. This life insurance product is normally taken out to protect a young family over a 20 or 25 year period. Although level term life insurance has no investment element or cash-in value, it can provide a substantial cash lump sum in the event of death. The cash value is guaranteed, although the provider may exclude certain pre-existing medical conditions.

Decreasing Term Insurance

Those seeking to clear their repayment mortgage in the event of death may decide to take out this variation of term coverage. Given that the outstanding mortgage goes down following each repayment, the amount of insurance needed doesn't need to be as great. This helps greatly in terms of affordability.

Whole Life Insurance

Unlike level term life insurance, a whole life policy is designed to provide coverage for the entirety of the insured's life. This is achieved by investing a portion of each premium in order to generate a substantial sum cash sum. This money is used to cover future premiums and provide enough money for when the policy needs to pay out. A whole of life insurance policy is typically used to provide money for a loved one when they die and/or as part of an inheritance tax avoidance strategy. Whilst it shouldn't be considered to be an investment, the policy does have a cash-in value.

Universal Life Insurance

Subject to a guaranteed minimum, the value of the cash fund accrues a rate of interest based on the performance of the money markets Whilst the world financial markets can be erratic, bonds, mortgages and money market funds are far more stable. The period of time that a universal life insurance fund is invested for serves to even out any peaks and troughs in the overall performance.