In the world we live in today, it is important to be financially organized, since anything can happen, as we have seen with the last year or two's financial disaster.
Purchasing insurance coverage will ensure an individual from experiencing any type of financial ruin.
There are various kinds of insurance available to protect your car, home, business, health, life as well as your pet.
In order to be able to obtain insurance suited to your needs and your budget, you need to be able to distinguish between the various types of insurance plans available, like term insurance and whole life insurance.
Understanding the difference between term and whole life insurance will be useful when choosing between a variety of life policies and may even help you distinguish what your insurance needs are.
These policies have both advantages and disadvantages and they need to be considered and compared to your needs.
Whole life insurance is also known as cash value life insurance.
With whole life insurance the insured is able to borrow the money that's been accumulated through premium payments over a period of time to use for whatever valid reason.
This, however, will have to be agreed to in advance in a written arrangement between the two parties.
You will need to repay this borrowed money as a lump sum payment, or over some time, depending on the agreement between yourself and the insurance company.
An advantage of whole life insurance and one of the biggest differences between term and whole life policies would be that the money you used in settling the policy can in fact turn out to be one of your future assets: some of the money you pay through monthly premiums would go to the insurance policy while the rest of the money is reserved for future emergencies like hospitalization or vehicle repairs.
Primarily, the difference between term and whole life policies can be found in the names itself.
Term insurance plans will only have you covered for a certain time period.
Term life insurance policies do not allow you to have a savings account, which means you aren't going to be able to borrow some of the money you have paid through monthly premiums.
An additional noticeable difference is the person that is allowed to purchase it: it is almost always the head of your home with dependent children and major assets for instance a home, property, business or automobile.
In the unfortunate event of the policy holder's death, the dependants or beneficiaries will be paid out the money and should be able to take care of the person's financial matters.
These are merely a few of the fundamentals involved in obtaining a life insurance policy.
There's so much more to take into consideration, so it's recommended that a person studies the various types of life policies available, as well as the various companies that offer them.
It is important that you make the right selection when obtaining life insurance, since it is going to be an important part of your dependants' or beneficiaries' lives.