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Types of Life Insurance: Term Life Insurance vs Whole-Life Insurance

Term Life Insurance vs Whole Life Insurance
There’s a lot of debate in the life insurance universe between whole and term insurance, and which is the best type of life insurance policy to have. Whole life offers permanent life insurance coverage, plus an increasing cash value, but it’s more expensive than term. Term insurance can offer the same coverage at a lower premium than whole life insurance, but there is no cash build-up, and it will expire at some point in the future. It pretty much boils down to personal preferences as well as what stage in life you are currently in.

If you are just starting a family and have just welcomed your first child, the answer is more obvious. Term life insurance is undoubtedly more suitable for young parents.

Consider the following factors:
1. Your Budget Is Tight and Life Insurance Isn’t an Immediate Need

Make no mistake about it, maintaining a whole life insurance at this point in your life will be expensive. And there will come at a time when you will be paying for medical expenses related to childbirth and the care of a baby, possibly for childcare, and for acquiring all of the goods and services that’ll be necessary as your baby grows into a toddler, and so on.

In that environment, life insurance simply isn’t an immediate need. There are all kinds of financial obligations that need to be met, so you will need to keep the cost of your life insurance to a minimum. You can do that through a term life insurance policy.
 

2. Your Need For High Coverage Is Actually Temporary

For most people, the idea that you need whole life insurance coverage is mostly a myth. Yes, you will need some level of life insurance throughout your life, but you probably may not need as much when you’re a new parent.

Term works especially well in this regard. If you take a 20 year term policy when your child is born, you’ll probably be able to cut down the amount of insurance that you need at the end of that term. After all, when your child is an adult and in college, the need for coverage will decline.
 

3. You Have Other Financial Priorities

The financial priorities that you have as a new parent are greater than at any other time of your life. Not only do you have other expenses, but you also have other provisions that need to be made. One of them is saving for your children’s college education. Another is making sure that you always have a well-stocked emergency fund – just in case. And at the same time, you also need to be providing for your own retirement.

That’s a lot of financial priorities to be juggling at once, and the only way to do it will be to keep your expenses to an absolute minimum. Term life insurance will accomplish this in regard to your life insurance needs.

You may find this plan suit your needs

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Important Announcement

Effective from 1 October 2019, Petaling Jaya Regional Support Centre will be relocated to 12th Floor, Menara Manulife, No.6, Jalan Gelenggang, Damansara Heights, 50490 Kuala Lumpur.

View more
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