Jun 12
Basic Life Insurance Options
When it comes to life insurance, you’ve got two basic options – term life insurance and whole life insurance coverage. Whole life insurance policies offer you an investment opportunity as well as a payout at the time of your death. Term life insurance policies are a month by month premium-paid arrangement with no investment component.
Whole life insurance policies are expensive. They also come in two forms: guaranteed return and non guaranteed return. The return refers to the amount of interest paid out to you for your investment. Guaranteed means that you will definitely earn interest on your life insurance payments, interest that will be automatically reinvested and grow tax free, allowing you to borrow against it if you like.
Non guaranteed returns means that you may or may not earn interest depending on how the market treats the investments that the life insurance company makes. Universal life insurance invests your money in a money market account and are not guaranteed. Variable life insurance invest in stock or bond mutual fund and returns are not guaranteed here either. Basically, whole life insurance is a bit of a gamble and an expensive one at that. Unless you have a bit of money to spend, there are better investments to make.
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