Which is the Best Life Insurance for You?

You know the importance of insurance and are mulling to buy one. At the same time, you are thinking, which is the best life insurance to buy, term or whole life? Here is a description of both kinds of insurances so that you decide for yourself which is the best life insurance.

You should mull over buying term life insurance in the following situations:

1. If you require life insurance for a limited period of time. Term life insurance allows you to take a policy of your desired term. For instance, if you have to pay off a debt in a certain period of time, you can purchase a term life insurance for that period. Similarly, if you want to ensure that there are adequate funds for your child's education, you can purchase a policy for 15-20 years. This way you will not have to worry about your kid's education when he grows up.

2. You have a tight budget, but require a big amount of life insurance coverage. In Term Life Insurance, a death benefit is paid out to the beneficiary if the policyholder dies during the term of the policy. If the owner is still alive, he will have to get the policy renewed, else he will not be able to reap in the benefits of the policy.

You can convert your term life insurance into permanent life insurance if the need be. You will not have to undergo a medical exam for this, but will also have to shell out more premium to avail this option.

An important thing to bear in mind is that when you are young, premiums are low. As you get older, premiums also rise. You can renew your term life insurance at the end of the term, but there will be a hike in the premium amount. To obtain cheap rates, some policies might need a medical examination at the time of renewal. So, to get the best life insurance, invest when young.

Permanent life insurance is ideal in the following situations:

1. When you require life insurance for your whole life. With a permanent life policy, you get a death benefit. It doesn't make a difference whether you die young or live up to 100. So in that case, it’s the best life insurance plan for you.

2. You intend to make savings which multiply, but is tax-free. It can act as a source of borrowed finance and can be used for a lot of things. These savings come to aid when you have to shell out premium to keep your policy alive, especially when you have no other source to pay the premium amount. These funds can also be utilized for other purposes.

It is pertinent to mention here that the premium amount for permanent life policy is comparatively higher than for term life insurance. Age doesn't affect the premium amount in a permanent policy, it remains the same. On the other hand, in term insurance, as you get older your premium amount rises whenever you renew it. Plus, if you are a smoker and have health problems, you will be charged a higher premium. Before offering a quote, some companies ask the applicant to undergo a medical examination. On the basis of this exam, the individual is offered a term life insurance policy.

Now that you know about both kinds of insurance plans, you can decide for yourself which is the best life insurance for you and buy it before it gets too late.