Which one better : Term Life, or Whole Life Insurance?
The debate often occurs between people who believe that the type of insurance “term life” is the only option with those who prefer the type of insurance “whole life”. One of the products derived from “whole life” is a link unit. Many of the arguments raised, but how the actual condition?
Good “term life” or “whole life” require us to pay insurance premiums to protect the financial risk due to death on the Insured policy. Money guarantee the potential for replacing the income of families who lost, making it possible for families left behind to continue the lifestyle or at least get a decent life, either to pay off the repayments of the home, car, charge a monthly routine, the children’s education and other things that can be realized source of income during the family still live.
Data from LIMRA says, should the value of money is the responsibility of 7-15 times the annual revenue source of revenue so that the family is enough to meet the needs of families who left during the next few years.
Fundamental difference of types of insurance “term life” and “whole life” insurance policy is ever to give protection.
Insurance type “term life” to ensure policyholders are protected in a certain time, for example, 10 to 30 years.
Example:
Mr. A type of insurance to buy “term life” that period is 20 years old 29 years old. Concerned will be protected by insurance until age 49 years. If the father died in a period of 20 years since he took the insurance policy santunan spirit will be given to heirs. Conversely, if a father died at age 49 years have past (beyond the 20 years since the insurance policy is taken), then they will not get any santunan soul.
Insurance type of “whole life” (for life) to protect policyholders that died, not tied at the age of the death.
During the fixed insurance premium paid, insurance policy will always provide protection. This type of insurance the “whole life” by people more interested in particularly also to insure their children relate the value premium is still at a young age is quite cheap and this value remains the same during the child’s life up to adult age.
Insurance type “term life” that have a period of time, offer a cheaper premium several times compared to the type of insurance “whole life”.
Many argued that the type of insurance “term life” more efficient because a cheaper premium. Difference in size of the premium which is far enough with the type of insurance “whole life”, we can buy more new insurance policy for the same product after the old insurance policy expires.
The argument that is quite interesting, “not over the age of parents increased the amount of the premium will be time to buy a new insurance policy will be more expensive?”
This is essentially true because the cost incurred to pay for the premium is still cheaper insurance of “whole life”.
Following the above example, at the age of 49 years, Mr. A could buy new insurance policy, be extended for 20 more years to come, so the contract ended when he turn 69 years old. Here the father of a family may have a consideration, at the age of 69 years, insurance is not needed anymore, first, because a father is too old to work (not more productive) and his family have menafkahi themselves so that each does not depend on the father of A .
There is one reason the entry diakal take a loss if the product “term life”. After the end of the insurance contract, there is no guarantee that policyholders will receive back the life insurance during the period of 20 years, which may have been infected with a critical illness so it was not possible to be insured again (uninsurable). Insurance companies have the consideration of the business of this kind.
The weakness of the product “term life” this is the excess of the product “whole life” because of the status of the holder of the type of insurance policy “whole life” can not be canceled by an insurance company even if they suffer a critical illness insurance contract during the run (inforce).
Other differences, other than the premium paid for the product “term life” used up, no money of any benefit if there is no life insurance claim money.
Types of insurance products in the “whole life”, other than life insurance money received when a claim, policyholders also receive a cash benefit insurance policy if the contract ends or is stopped in the street. This condition is usually called surrender in the world of insurance, the amount of money the investment will be returned, in accordance with the growth of the investment itself.
Last argument may occur from the product they are pro “term life”, types of insurance products “whole life” in terms of the less profitable investment. Better to separate insurance with investment. Money that could offset savings can be invested in instruments such as mutual funds, stocks, bonds, gold etc..
This will give the results (return) the better.
The strategy seems to be perfect on, but there is one problem that appears.
You people put aside money each difference arising from the “expensive” insurance type “whole life” policy with the type of “term life” to invest.
Indonesian people have a habit to follow trends to invest, which discussed many, many collected therein for money invested. This effect, such as iceberg that is ready to collapse, the index stocks are climbing the peak condition, but this situation will not stay on top forever, can anjlok time.
If I could think, I mean money-the money collected in a large vessel which is then distributed in a variety of instruments.
Say we have experienced and how have the expertise to invest in the right, still there is no guarantee that investment returns will grow, is also on the product “whole life”.
There is always a risk.
Choice between insurance type “term life” and “whole life” returned again to the destination to invest, how much ability to face risks, and how each individual investment style.
