Pros and Cons of Term life INSURANCE vs Whole life Insurance:

The insurance is a contact when you choose a policy you have to know about the pros and cons of insurance to choose a right policy. You have to determine which choose best for you which fits your needs.

1. Term Life Insurance:

Pros:

1. Lower Premiums: when you are in younger age generally term life insurance have less premium as compared to whole life insurance.
2. Simplicity: It is very simple and straight forward that it is a policy for specific time period such as 10 ,20,30 years age. If your death occurs during this time period, you loved received death benefit.
3. Flexibility: You can choose the Length of a policy according to your financial goals coverage of amount until your children are grown up.
4. Convertible Options: Many insurances company offers and allow to convert your policy and provides you flexibility to change the policy without a medical.
5. Affordability: The most significant advantage of this policy that it provides you effectiveness in cost. it provides you to coverage of all funds without a cash value. it is the best for younger individual who want to manage all cost under control.

Budget –Friendly: This premium provides a set to mange of budget in financial goals and helps in saving of retirement and investment.

Term life insurance have many strengths such as simplicity, flexibility, affordability. These factors make this policy more effective against any risk of your valuable assets.

Cons:

1. No Cash Value: In this type you do not have to build a cash value. is no return payout of premiums.
2. Rising Costs with Age: If your age increases your premium become higher. If your policy expires and you want to renew other policy now at that time your premium will be higher.

Temporary Coverage: It gives a coverage of specific time period. but if you want a long-life policy you have to renew a policy or you can buy other policy.

Whole Life Insurance

           Pros:

1. Lifelong Coverage: Whole life insurance provides coverage for your whole life even you have paid your all premium. Your loved ones get benefit when you die.
2. Cash value Component: Wen you pay your premium your cash collect in your account that increases gradually. You can borrow you and for use you pay your premium later.
3. Fixed Premiums: If you want long term benefit you have to fix your premium for long term.

Dividend Payments: Some company offer you a policy of divide in which your cash value increases your premium reduced and pay in the form of cash.

Cons:

1. Higher premiums: In same coverage amount, whole life insurance premium is higher the term life insurance premium.
2. Complexity: The whole life is more complex the term life due to cash value that you don’t can understand easily.
3. Lower Returns on Cash value: This component is growing at conservative rate are less than the benefit which you achieve on other investments.
4. Opportunity Cost: When you select higher premium then its means that you have to less money to invest and do not get higher returns on other investments.

Inflexibility:

2. Long term Commitment: In whole life insurance you have a long-term insurance policy in which you can get larger benefit you have to pay for larger decades to pay premium. When your financial changes occur, you can change your policy and also can get out from this policy easily. But if this policy ends earlier, you get less benefit than the total amount you have paid already.
3. Limited Flexibility: This insurance gives less flexibility in coverage amount or premium payment then the other types of permanent insurance. This is the larger drawback you need your time, and you can increase and decrease coverage.

Surrender Charges and Penalties: 

• Early Surrender Costs: If you surrender your policy earlier in few years get significant changes. It can also change the amount of cash if we cancel our policy. You can get less benefit from this policy.
• Long Term Penalties: There is also alone drawback is that if you surrender your policy after many years, you decrease your benefits and get loss as compared other investments of life. It is an alternative investment.

Summary:

Term life insurance is an effective step as compared to those seeking affordable and temporary and protect your financial assets and gives you protection from any risk.

Whole life Insurance is best for those who wants to get larger benefit and get long term benfit.it is suited for those who pay higher premium of Insurance.

• Conclusion:

Whole life insurance gives you long term benefits with many significant drawbacks. When you have premium, you have to return less amount and no flexibility, but it is less appealing and best for affordable insurer. Long term insurance gives your temporary benefit for short period of time best for those seeking straight forward policy.