Question

When making the decision to select Whole Life, Universal Life, Term or Variable Life Insurance, you must consider cost, risk and personal family circumstances.

1, Make a positive case and a negative case for each type of policy above and identify at what age you might consider each.

If you feel you are too young to take out insurance at this time, or you have no responsibilities to anyone or you feel you have no worth........   I will assume that just by enrolling in a college class you have made the decision to improve yourself. So give me a well thought out answer. Please ensure that you identify the specific differences in these types of insurance programs when explaining your answer.

Answer 1

Whole life insurance : insurance for the entire life time of the insured person. The insurance benefits are paid by insurance company to the beneficiaries of the insured when he dies.

Positive case:

• It guarantee death benefits and premiums both.
• This policy keeps a part of premium as savings which can accumulated as cash value

Negative case:

• The premiums can be very expensive as it covers entire lifetime.
• It can increase monetary burden as insured has to pay premium until his death.

Universal life insurance: it also gives coverage for entire lifetime but this policy is more flexible than life insurance.

Positive case :   

• Premiums are low
• Accumulates cash value that increases over time, as premiums are paid.

Negative case

• It gives uncertain returns due to change in policy rates
• The policy has risk of lapse

Term life insurance : term life insurance provide coverage for a fixed period of time.

Positive case :

• Low and affordable premiums
• Flexible policy system

Negative case:

• No cash value benefits
• No wealth creation

At the age of 20s we can consider term life insurance and at the age of 30s or 40s we can consider term as well as any permanent (entire lifetime coverage ) insurance policies. 50s or above we can consider any high premium insurance policy.