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THERE ARE ONLY TWO TYPES OF LIFE INSURANCE, "WHOLE LIFE" AND "TERM" THE DIFFERENCES ARE EXPLAINED BELOW
"TERM" INSURANCE "TERM" LIFE IS WRITTEN FOR A "FIXED" PERIOD OF TIME AND IS CONSIDERED "TEMPORARY" COVERAGE, NORMALLY ASSOCIATED WITH COVERING AN EARLY, UNEXPECTED DEATH OF THE INSURED. YOUNG COUPLES BENEFIT FROM TERM COVERAGE BECAUSE IT IS INEXPENSIVE AND WOULD COVER LARGE EXPENSES SUCH AS HOME MORTGAGES, CHILDRENS EDUCATION, ECT. THE RATES ARE VERY LOW, AND EASILY AFFORDABLE TO YOUNG PEOPLE, BECAUSE THE POLICY WILL "EXPIRE" AT A SOMEWHAT EARLY AGE, AND THE COMPANY HAS A VERY LOW "RISK" OF HAVING TO PAY THE DEATH BENEFIT. PEOPLE WHO SEEK TERM COVERAGE AT OLDER AGES FIND THAT THE "TERM" GETS SHORTER DEPENDING ON THEIR AGE AT THE TIME OF PURCHASE. FOR EXAMPLE, A PERSON AT AGE 49 MAY BUY A 30-YEAR TERM POLICY, HOWEVER, IF HE WAITS UNTIL AGE 50, HE MAY ONLY BE ALLOWED A 20-YEAR POLICY. MOST COMPANIES DO NOT SELL "TERM" COVERAGE TO PEOPLE OVER 65, AND THE FEW THAT DO WILL USUALLY LIMIT THE POLICY TO NO MORE THAN 5 YEARS.
"WHOLE LIFE" INSURANCE "WHOLE LIFE" IS PERMANENT LIFE INSURANCE, AND CANNOT BE CANCELLED THROUGHOUT THE INSUREDS LIFETIME. THE RATES ARE SOMEWHAT HIGHER THAN TERM LIFE, BECAUSE THE COMPANY KNOWS THAT THE INSURED MAY LIKELY KEEP THE COVERAGE UNTIL DEATH. TO HELP REDUCE A LARGE POTENTIAL LOSS, "WHOLE LIFE" POLICIES HAVE A "CASH VALUE" THAT BEGINS ACCUMULATING OFTEN TIMES AS EARLY AS THE SECOND YEAR THE POLICY IS IN FORCE. THE "CASH VALUES" OF A POLICY CAN BE USED IN MANY WAYS. A PERSON CAN "BORROW" THIS MONEY AT ANY TIME AT A VERY LOW RATE OF INTEREST, AND ALLOW THE "DEATH BENEFIT" TO PAY IT BACK IF THEY CHOOSE TO. THIS WOULD REDUCE THE PAY-OUT TO THE BENEFICIARY AT DEATH. THESE "CASH VALUES" MAY ALSO BE USED LATER TO "PAY" PREMIUMS ON THE POLICY ITSELF, AGAIN REDUCING THE "PAY-OUT" AT DEATH. AND LAST, THE INSURED MAY DECIDE TO "CASH-IN" THE POLICY AT SOME POINT IN TIME AND RECIEVE THE "CASH VALUE" UPON SURRENDER OF THE POLICY. THIS NORMALLY OCCURS IF THE INSURED FINDS HE NO LONGER NEEDS THE POLICY FOR THE REASON HE FIRST BOUGHT IT. SOME TYPES OF "WHOLE LIFE" POLICIES ARE WRITTEN FOR A "FIXED" PERIOD OF TIME, ALSO, SUCH AS 20-PAY WHOLE LIFE. THESE TYPES OF POLICIES ALLOW A PERSON TO PAY A SOMEWHAT HIGHER PREMIUM AND HAVE THE POLICY "PAID FOR LIFE" AT THE END OF THE 20 YEARS. IN ANY EVENT, ALL PREMIUMS STOP AND THE POLICY IS "PAID-UP" AT AGE 100. ANALYSIS: "TERM" LIFE IS MOST BENEFICIAL FOR THE YOUNG, AND "WHOLE LIFE" IS NEARLY ALWAYS THE MOST BENEFICIAL CHOICE FOR OLDER AGES.
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