The premium paid for a whole life policy is higher than the premium for term life because: whole life insurance provides both insurance protection and savings. An alternative approach to purchasing whole life insurance is to: purchase term life insurance and invest the premium difference in other investments.
What is whole life insurance What benefit does it provide that term insurance does not?
Term coverage only protects you for a limited number of years, while whole life provides lifelong protection—if you can keep up with the premium payments. Whole life premiums can cost five to 15 times more than term policies with the same death benefit, so they may not be an option for budget-conscious consumers.
What is one benefit of term life insurance over whole life?
Both term life insurance and whole life insurance offer guarantees: Premiums won’t change and the death benefit amount paid to beneficiaries doesn’t change. The main differences are in coverage length and cash value. Term life insurance offers no cash value and it’s possible you could outlive the policy.
What is whole life and term life insurance and how does it work?
A whole life policy covers the rest of your life, not just a stated term. As long as your policy is in force when you pass away, your beneficiaries will receive a death benefit. Build equity. Over time, a portion of the premiums you pay for a whole life policy become part of the policy’s cash value.
Which of the following is a benefit of whole life insurance quizlet?
Whole life insurance features more guarantees than any other form of permanent life insurance available today. It provides guaranteed death benefit protection for the insured’s whole life. No matter when the insured dies, the policy pays the face amount stated in the policy.
What happens to money at end of term life insurance?
What happens to my premiums when the policy expires? At the end of your term, coverage will end and your payments to the insurance company will be complete. If you outlive your term life insurance policy, the money you have put in, will stay with the insurance company.
Do you get your money back at the end of a term life insurance?
If you outlive the policy, you get back exactly what you paid in, with no interest. The money back is not taxable, as it’s simply a return of payments you made. With a regular term life insurance policy, if you are still living when the policy expires, you get nothing back.
What happens to term life insurance when you turn 80?
When you outlive your term policy, you will no longer have life insurance coverage—but you can convert to a permanent policy or buy new term insurance.
Can you cash out a term life insurance policy?
Because the number of years it covers are limited, it generally costs less than whole life policies. But term life policies typically don’t build cash value. So, you can’t cash out term life insurance.
Which of the following is a downside of term life insurance quizlet?
Disadvantages of term insurance are: premiums that increase and become unaffordable in later years. the need for coverage may exist after the policy expires. no cash value accumulates during the policy period.
What are the disadvantages of a whole life insurance policy?
Like all insurance products, whole life insurance has its downsides: It’s expensive. Since permanent policies offer lifelong coverage, they come with a significantly higher price tag. Whole life typically costs 5 to 10 times more than term life insurance.
Can you convert term to whole life?
Most term life insurance policies automatically include a term conversion rider that allows you to convert your existing term policy to a whole life policy. (If yours doesn’t have one, or if you’re not sure if you have a convertible term life insurance policy, talk to your insurance company.)
Which of the following is the key characteristic of term life insurance?
Term life insurance guarantees payment of a stated death benefit to the insured’s beneficiaries if the insured person dies during a specified term. These policies have no value other than the guaranteed death benefit and feature no savings component as found in a whole life insurance product.
Which of the following is a benefit of whole life insurance?
A key benefit of whole life is that it’s considered a permanent life insurance policy. It’s meant to provide you with a lifetime of coverage protection with premiums that won’t increase, won’t expire after a specific number of years, and can’t be cancelled due to health or illness.
Which of the following is an advantage of whole life insurance?
All of the following are advantages of whole life insurance, EXCEPT: The premium-paying period may extend beyond the income-earning years. … This life insurance policy provides death protection for the insured’s entire life, but premiums are not paid for the insured’s entire life.
Which of the following is not characteristics of whole life insurance?
All of the following is NOT a characteristics of whole life insurance: The cash value in a permanent life insurance policy is not a nonforfeiture benefit. … Cash value may be used as a policy loan, without affecting the death benefit.